Self-employed slip the net
THE self-employed are among the hardest hit by the Covid-19 lockdown as their incomes collapse, and many fear their livelihoods could disappear.
Last week the Government extended the self-employment income support scheme (SEISS) for a further three months, but this will be the final grant.
Many have fallen through the gaps, notably short-term contractors who find themselves ineligible both for SEISS and the furlough scheme for employees.The long-term cost could be severe, especially for those who have to stop pension contributions due to lack of income, and worry about when they can restart them.
Allison Gruner, 35, is a selfemployed contractor who works in the TV and film industry, which means she does not get any support but is scraping by on a rapidly shrinking pot of savings: “I am in this weird limbo, where the Government does not recognise me, even though some unions are fighting for people in my situation.” Allison is living week by week, hoping the lockdown will ease and work will pick up.
So far she has resisted taking a mortgage holiday: “You still have to repay the interest later on, and that thought stresses me out.”
As a contractor, she does not get a company pension, but saves for retirement through online provider PensionBee.com.With money tight she has not been able to make any personal contributions: “That really worries me, and as soon as I start working, I will pay in again.Today, it is not my priority.”
PensionBee chief executive Romi Savova said its self-employed customers have been hardest hit: “They typically make higher than usual pension contributions at the end of the tax year, but not this year.”
She urged them to pay into their pension as soon as they can to claim valuable tax relief: “Limited company directors can make employer contributions from their business.”
Others should check their eligibility for SEISS, which will cover 70 per cent of average monthly profits up to £2,190 a month, totalling £6,570 for
June, July and August. The original scheme covered March,April and May, and applicants have until July 13 to put in a request.Applications for the extended scheme start in August.
Only those earning less than £50,000, who generate more than half their income through self-employment, will qualify.
Some 2.3 million people applied for the first grant and Hargreaves Lansdown personal finance analyst Sarah Coles said this will help ease the rising panic many face. However for others, it will not be enough: “As businesses struggle, work for the self-employed is often the first to go, and it will take time to snap back.”
To make matters worse, the self-employed often have lower pay and smaller savings, Coles added.
Mike Cherry, national chairman of the Federation of Small Businesses, said sole traders in the hair and beauty, events and travel sectors will be hit for weeks to come.
He called for more help, which has so far only been limited to those who submitted returns for the 2018/19 tax year.