Sole workers may finally receive Treasury support
Sole workers have received no support
Sole traders and other small business owners left out of the government’s support packages could finally receive a financial bail-out.
The Treasury is looking at a scheme that would pay up to 80% of lost trading profits of many self-employed workers such as plumbers, engineers, and freelance musicians who pay themselves in dividends.
As many as a million workers have been ineligible for the Government’s Self-Employed Income Support Scheme (SEISS) because the Treasury struggled to work out how to pay for lost dividends at the same time as stopping support going to rich investors.
But a new Directors Income Support Scheme is being looked at that would pay grants of up to £7,500 and would be limited to those who earn less than £50,000 a year.
Initial estimates have put the cost of the scheme at up to £3 billion depending on take-up.
Rishi Sunak: looking at scheme
A government source told The Sun newspaper that there was still no guarantee that the scheme will be introduced as there are a number of loopholes to close down to avoid fraud, waste and legal challenges.
The proposed scheme would assess the size of grants for each applicant based on three years’ worth of accounts and they would have to prove reduced demand caused by the Covid crisis.
Under the directors’ duties they will be committing an offence if they provide dishonest data.
The proposals were originally drawn up by the Federation of Small Businesses, the Forgotten Ltd campaign, former Office for Tax Simplification adviser Rebecca Seeley-Harris and the Association of Chartered Certified Accountants (ACCA).
They submitted the proposals to the Treasury towards the end of last year and a government source said the group of four had a “productive meeting” with Treasury minister Jesse Norman last month.
There are about 946,000 non-employing companies and 1.1 million micro-entities that set themselves up as director-owners. They pay themselves with a small PAYE salary and a variable dividend depending on annual profits.