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Lockdown support scheme ‘extremely unfair’ on recently self-employed, says expert

PUBLISHED: 12:08 16 June 2020 | UPDATED: 07:24 17 June 2020

Decorator and handyman Lee Riley of Kesgrave who has used up his savings to stay afloat  Picture: LEE RILES

Decorator and handyman Lee Riley of Kesgrave who has used up his savings to stay afloat Picture: LEE RILES

Lee Riley

The “unfairness” of a government scheme for the self-employed has left hundreds of workers across Suffolk out of pocket, an accountancy firm believes.

Stephanie Hammond of Beatons Accountants  Picture: CLAUDIA GANNONStephanie Hammond of Beatons Accountants Picture: CLAUDIA GANNON

Beatons Group said calculations used to work out pay-outs under the Self-Employment Income Support Scheme (SEISS), which was designed to help self-employed people through the coronavirus crisis had left some “drastically” short.

In theory, people working for themselves were entitled to claim a taxable grant of 80% of their average monthly profits of up to £7,500.

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But Stephanie Hammond, director of the Ipswich-based chartered accountants said many had been caught out by how the calculation is made.

“The government averages three years of tax returns in order to calculate pay-outs for self-employed workers,” she said.

“For people who have become self-employed very recently, it can be extremely unfair using a very basic calculation. I fully appreciate that this has been done for speed and the ease of administration, but many people are receiving much lower amounts than they would have expected.”

Those applying SEISS were also not allowed to use an accountant to submit their application – unlike businesses wanting to furlough staff under the Coronavirus Job Retention Scheme.

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Beatons client Lee Riley, from Kesgrave, who has run his own decorator and handyman business for two and a half years, was among those to lose out.

The 39-year-old would normally earn in excess of £2,000 a month before expenses, but received a SEISS payment of just £1,500 for a three-month period – an average of £500 a month.

“I think my biggest grievance is that I abided by every government guideline when it came to COVID-19,” he said. “Many of my customers are older people so I would never put them at risk. I contacted them all saying I was putting everything on hold and downed tools.

“But now I feel like I’ve been kicked in the teeth. I don’t want to appear ungrateful because I have received some money. However, it has literally only helped me for a month and that’s because of how it’s been calculated using my taxable profit.

“I live on my own and my outgoings are around £1,300 per month. I have a 10-year-old daughter who lives with her mum to provide for, as well as the usual bills and rent.”

Mr Riley said he had been forced to use up his savings to stay afloat while his landlord has helped by putting a hold on his rent for three months.

“Running a business, you try to have a pot of savings behind you. I had £2,800 and now have just £16 left.

“I never expected the government to match my money pound for pound for what I could have earned during lockdown but £1,500 for three months is an awful lot less than I would have earned.”

SEISS, which was launched on May 13, has been extended for another three months which will allow workers to make a second claim in August for up to £6,570 – up to 70% of their average monthly trading profits. Applications open in August.

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