Articles - 29th May 2020

Is SEISS fair?

Words by Marisa Bate
Illustration by Jon McCormack

As a freelancer, I’ve grown accustomed to feeling unentitled. You get used to no sick pay or holiday pay. Freelancers are classed as “unsecured creditors” which means we’re at the bottom of the list for any payouts should a company go bust – an increasingly common occupational hazard in my field. I’m frequently ghosted by editors resulting in a strong sense that my very existence is disposable. So I wasn’t exactly holding my breath after Chancellor of the Exchequer Rishi Sunak announced the truly generous Job Retention Scheme for full-time members of staff.

But at the end of March, Sunak revealed the Self-Employment Income Support Scheme, or SEISS. SEISS offers the self-employed a taxable grant of 80% of average monthly trading profits, paid in one lump sum, up to £7,500.

When it did finally arrive, after a perilous six weeks, it was a straightforward, easy and positive experience (something, to put it mildly, that can’t always be said for dealing with the DWP – just ask any parent liaising with the Child Maintenance Service).

Many freelancers have told me they had the same experience; how easy it was to apply, how quickly the money arrived in their accounts. I found the process so simple that I’d assumed I’d done something wrong, missed out a section, ticked the wrong box. And the money arrived so quickly that it was in my account before the HMRC email informing me I was due to receive the grant. As any freelancer can attest, this is a beguiling experience.

For those who have received sums they are expecting, it has been a “lifeline”, as one freelancer put it to me. When my amount came up in massive numbers on the screen, I felt like a lottery winner. It was not a life-changing amount of money by any means, but I felt surprised to be receiving anything.

I’ve spent a long time furious at a Conservative government for the devastation of austerity, and now here they are giving me (almost-free) money. Like Piers Morgan’s newfound popularity among the left, this felt like one of the countless ways the pandemic has shifted the cornerstones on which the world sits.


Who misses out?

Yet it is precisely this seemingly lottery-like aspect to SEISS that is causing plenty of other freelancers such anguish. As Ryan Barnett, Economic Policy Adviser at The Association of Independent Professionals and the Self-Employed (IPSE) put in a statement to me: “For those eligible it is one of the most generous worldwide, however it has sharp edges. Those who fall just outside get nothing and are left behind”.

The scheme excludes the newly self-employed, directors of limited companies, which according to the ONS is 14.3% of the self-employed population; the self-employed who have earned less than £50,000 in three years; and freelance income earned through PAYE. I fell into that last camp and was missing around third of what I would have been entitled to if the scheme took into consideration all sources of my freelance income, because of temporary freelance shifts at magazines on PAYE.

According to the Institute for Fiscal Studies, of the 5.1 million registered self-employed, 2 million people with some self-employment income will not have it covered by SEISS. Among the 3.8 million people who received more than half of their income from self-employment, the IFS estimates that roughly 18% will be ineligible.

Sectors to be particularly hard hit by the exclusion of PAYE freelance work are TV, radio, film and theatre. According to Bectur, a union for non-performance roles across creative industries, 47% of their members were not employed on March 1st, meaning they fall between the Job Retention Scheme and SEISS.

Even if they had been in employment, many freelancers on PAYE aren’t being furloughed. Could there be a way round this? Isn’t this something the government could rectify? Bectur’s CEO Phillipa Childs has suggested “the Treasury should set up a new Freelance Worker Income Support Scheme using the PAYE data they have to calculate average earnings for people who declare as ‘PAYE freelancers’ and compensate them at the 80% rate directly without going through an employer’s payroll system”.

For Matthew Knight of Leapers, an online community supporting freelancers and their mental health, it is important to consider the semantics. “The definition of ‘self-employed’ is broken”, he tells me. “So ‘freelancer’, for instance, has no legal or tax definition. It doesn’t mean anything. And everybody who is a company director, because they’ve registered as a limited company, means legally they’re not self-employed, even though they work for themselves. In the eyes of the taxman, they are an employee of a company. It was a massive surprise to me. I thought I was self-employed, then I discovered I wasn’t”.

For some, becoming a limited company was essential “because their clients won’t work with them if they’re not” says Knight. “A couple of years ago, becoming a limited company was seen as an anti-money laundering thing, along with Right To Work legislation, which forced a lot of the companies to say, ‘We can’t work with you unless you’re a limited company, then we know you’re legit’. So most creative freelancers are limited company directors, not because of dividends but in order to work”. #ForgottenLtd, a campaign for limited company directors, is asking the government to extend SEISS to them and their petition currently has over 65,000 signatures. IPSE suggests an alternative. Government should “extend the Job Retention Scheme to include dividends, through which many limited company contractors pay themselves”.

Another group who feel penalised by SEISS is those who were on maternity leave during the last three years of freelancing. Olga Fiztroy of campaigning group Pregnant Then Screwed and founder of the Parental Pay Equality campaign tells me that this will lead to “tens of thousand of women receiving less financial support than their male colleagues further increasing the shocking 43% gender pay gap among the self-employed”. When I reached out on Twitter for freelancers to share their SEISS experiences with me, this was a very common complaint. Even in extraordinary times, the same old rules apply – women still feel punished by the world of work and take a significant financial knock for having children.

In a Twitter DM, one freelancer revealed the lack of work over the last financial year due to mental health reasons caused by a family member’s death. This saw her massively miss out on her grant. Although there is an appeals process, there is no leeway for the realities and complications of life that can prohibit us from working. This, of course, is at the core of being freelance; we accept the tradeoff of working independently and paying less in taxes but forego some expectations of support and help. And while there has been resounding gratitude for those who have received the grants, the lack of flexibility in some cases feels quite cruel. We are more inclined to accept these trade-offs in normal times, but these aren’t normal times. And it seems unfair that hardworking freelancers are in need and overlooked while other freelancers not in need are receiving payouts regardless.


What can be done?

According to BECTU, half of people working in creative industries have been forced to borrow money and one third are using money set aside for tax bills.

The government is offering loans such as the Coronavirus Business Interruption Loan Scheme (CBILS), providing up to £5 million of loans for SMEs as well as Bounce Back loans, offering up to £50,000 which does not have to be paid back for 12 months. Another option is Universal Credit. However, as one freelancer told me, because of their savings, they were not eligible. If you are, however, your SEISS grant is counted as income so you will get less. It’s worth remembering that you can defer your July 2020 self-assessment income tax payments until January 2021.

On Friday 22nd May, Rishi Sunak released a video on Twitter in which he was taking questions from members of the public. One woman asked him if he had any plans to extend SIESS, as he’s done with the Job Retention Scheme, extending the help until October. Sunak made it very clear this won’t be happening, suggesting those receiving the grant are still able to work (this is a problematic theory: if there are no clients, how can anyone work?).

While some freelancers confessed to me that they would feel guilty taking extra money when they are no in need of it, and don’t think there should be a blanket extension, others, who have seen their businesses fold or grants were much less than expected, are desperate. IPSE are univocal; the government must not commit a glaring injustice by extending the employee Job Retention Scheme but pulling the rug from under the self-employed. Maintaining employee support while scraping self-employed support also risks forcing freelancers back to work in unsafe conditions. It risks forcing them to make an awful choice between their health and their income.”

Health pandemics are not unprecedented but shutting down the economy in response most certainly is. Yet even adjusting for these strangest of times, it still feels that a lot of hardworking people, people who have paid taxes and added to the economy, have simply been ignored. People who have been ill, faced mental health issues or gone on maternity leave have paid a high price. This agony is intensified by watching others receive generous support. Simply put, SEISS itself, and next to the JRS, doesn’t feel fair.

Freelancers contribute an estimated £145 million to the economy. SMEs support families up and down the country. The arts offer balm and relief to mental health issues – something frontline workers will be in profound need of. Rishi Sunak’s package has helped many. But far too many others have been left behind.

We champion the freelancers and every entrepreneur who took a leap of faith with their idea.

If this sounds like you, head over to our Virtual Office and send us your best work via an UnderPinned Portfolio. We want to hear from you!

Make your UP portfolio

Related Articles

Seven questions to ask yourself before sending a portfolio

There are many things that make the difference between a successful and an unsuccessful portfolio, and there are some factors that are out of your ...

Read more
How freelancers can detach from billable time

It’s Saturday morning. After kicking back on Friday night, I thought I had signalled ‘weekend mode’ to my mind. Sadly, and I’m not proud to admit i...

Read more
A checklist for the January 31st tax deadline

It’s boring, but if you’ve saved money specifically for this purpose, it shouldn’t be painful. Here’s what you must do to get through your self-ass...

Read more