The Institute for Fiscal Studies (IFS) has published a new report analysing groups of workers whose earnings have been adversely affected by the pandemic but who have not been eligible for government support. The report Who is excluded from the government's self-employment income support scheme and what could the government do about it? notes the generosity of the self-employment income support scheme (SEISS) for those who are eligible to make a claim (and the 77% take-up rate) but highlights five groups who have missed out:
self-employed with profits exceeding £50,000 (225,000 people);
self-employed with less than 50% of income derived from self-employment (1.3m people);
self-employed who were making losses before the pandemic (500,000 people);
those entering self-employment since April 2019 (200,000 people); and
company owner-managers (700,000 people).
The IFS notes that two groups are excluded because it would technically be difficult to include them. For those who were not self-employed before April 2019 and had not submitted a tax return, the government had no record of their pre-pandemic profits – although the IFS suggests that the cost of supporting this group would be relatively low, given they number 200,000 people and profits in early years of self-employment tend to be low.
Supporting company owner-managers would also present a technical challenge for HMRC in distinguishing income taken by owner-managers via dividends, from dividends earned from investment in other companies.
The IFS submits that the government ‘could easily provide support through SEISS, but has chosen not to’ for the following two groups, covering around 1.5m people:
Those earning over £50,000: the IFS notes the arbitrary cut-off point, with one individual previously earning £50,000 eligible for support, but another earning £50,001 receiving nothing. The IFS estimates it would cost £1.3bn per quarter to extend SEISS to the full group and proposes that tapering away support between £50,000 and £100,000 would reduce that cost to £350m per quarter.
Those with less than 50% of their income from self-employment: the IFS estimates that many in this group are on low and moderate incomes, suggesting that extending SEISS would cost between £500m and £800m per quarter.
Jonathan Cribb, senior research economist at the IFS said: ‘the government has arbitrarily excluded two groups from self-employed support (those with incomes of less than £50,000 and those with less than 50% of their income from self-employment). At relatively low cost the government could choose to extend the support scheme to both groups, particularly if the created a tapered support scheme for higher earners.’
The Institute for Fiscal Studies (IFS) has published a new report analysing groups of workers whose earnings have been adversely affected by the pandemic but who have not been eligible for government support. The report Who is excluded from the government's self-employment income support scheme and what could the government do about it? notes the generosity of the self-employment income support scheme (SEISS) for those who are eligible to make a claim (and the 77% take-up rate) but highlights five groups who have missed out:
self-employed with profits exceeding £50,000 (225,000 people);
self-employed with less than 50% of income derived from self-employment (1.3m people);
self-employed who were making losses before the pandemic (500,000 people);
those entering self-employment since April 2019 (200,000 people); and
company owner-managers (700,000 people).
The IFS notes that two groups are excluded because it would technically be difficult to include them. For those who were not self-employed before April 2019 and had not submitted a tax return, the government had no record of their pre-pandemic profits – although the IFS suggests that the cost of supporting this group would be relatively low, given they number 200,000 people and profits in early years of self-employment tend to be low.
Supporting company owner-managers would also present a technical challenge for HMRC in distinguishing income taken by owner-managers via dividends, from dividends earned from investment in other companies.
The IFS submits that the government ‘could easily provide support through SEISS, but has chosen not to’ for the following two groups, covering around 1.5m people:
Those earning over £50,000: the IFS notes the arbitrary cut-off point, with one individual previously earning £50,000 eligible for support, but another earning £50,001 receiving nothing. The IFS estimates it would cost £1.3bn per quarter to extend SEISS to the full group and proposes that tapering away support between £50,000 and £100,000 would reduce that cost to £350m per quarter.
Those with less than 50% of their income from self-employment: the IFS estimates that many in this group are on low and moderate incomes, suggesting that extending SEISS would cost between £500m and £800m per quarter.
Jonathan Cribb, senior research economist at the IFS said: ‘the government has arbitrarily excluded two groups from self-employed support (those with incomes of less than £50,000 and those with less than 50% of their income from self-employment). At relatively low cost the government could choose to extend the support scheme to both groups, particularly if the created a tapered support scheme for higher earners.’
