Thousands of self-employed people – in particular those working in the creative industries – who set up limited companies have been “devastated” by being excluded from the chancellor’s bailout.
On Thursday night Rishi Sunak said the government would pay self-employed workers 80% of their profits – up to £2,500 a month – for three months, starting in June.
He said the measure was “one of the most generous schemes anywhere in the world” and would help 95% of the self-employed. A similar scheme has already been offered to employees.
However, it has emerged that neither scheme will help anyone who has set up a sole-person limited company, meaning thousands of freelance writers, photographers and others working in the creative arts will get no help.
The Guardian has been contacted by several of those affected, who say this will ruin them financially. They face having to claim universal credit instead, with its far lower payouts.
Thousands of actors, designers, film crew and others found themselves out of work and unpaid when the government introduced its coronavirus restrictions.
One of those is a sound engineer who does work for documentaries for the BBC and Netflix. All his projects are on hold and his work has evaporated, he said.
“This is a disaster for thousands of people like me,” the worker, who did not want to be named, told the Guardian, after two hours on while calling the universal credit phone line.
“I was advised to set up the limited company as it was a tax-efficient way to operate, and because it makes processing payments much simpler. Many who work in this world have done the same. We are just as self-employed as those being helped, but inexplicably find ourselves left out the scheme. It’s devastating.”
Brian Palmer, a tax policy expert at the Association of Accounting Technicians, said this group was stuck in the middle of the two bailout schemes.
“Many of this group draw a low salary and top up their income with dividends. They will not qualify as self-employed, or for a significant payment from the coronavirus job retention scheme. Instead, they risk dropping through the cracks,” he said.
“We must ensure that everyone gets the support they need to stay afloat and that the UK economy is able to not only recover, but also to thrive.”
Heather Self, a partner at the accounting and business advisory services Blick Rothenberg, agreed this group was likely to be feeling left behind.
“The government and HMRC have worked incredibly hard to get something out which will help the majority, but there are some losers.’,” she said. “A family with one earner on £51,000 will get nothing, whereas another with two people earning £49,000 each will get two lots of support. Someone with a mix of self-employed and earned income also may not qualify.”
The Treasury has been approached for comment.