3 million UK workers and businesses excluded from coronavirus support schemes

Woman holding out hand

The coronavirus pandemic has had unprecedented and substantial financial impact across the world. The UK government responded quickly, introducing schemes for workers and businesses at high risk of redundancy or insolvency.

Support included the coronavirus job retention scheme (CJRS) to keep workers on payroll, with 80% of their wages paid by the government. Business grants were quickly provided, and the self-employed income support scheme (SEISS) was later introduced.

However, an estimated three million are ineligible for the relief schemes, despite worsening financial circumstances. Some workers have been left with zero income as a result of not being suitable to claim Universal Credit.

In this article, we’ve covered who has been excluded from support, and why, as well as the government’s response to campaigners who continue to fight for support.

 

Who has been excluded from coronavirus support schemes?

There are many unique circumstances that have impacted eligibility for the support schemes in place. However, large groups quickly began to form – below are some of those affected.

  • New starters excluded from CJRS
    • Anyone who started a new job must have had their RTI details submitted via payroll prior to 19th March (previously 28th February)
    • Employees who started a new job after 19th March are excluded from furlough
  • Directors of limited companies unable to claim dividends
    • Directors with a salary made up of dividends can only claim CJRS on the PAYE part of their income – and they can’t work if they furlough themselves
    • Those who submit their PAYE annually and missed the RTI cut-off date are unable to claim
  • Self-employed excluded from the SEISS
    • If they have annual trading profits over £50,000
    • If less than half their income is from self-employment (based on their 2018/19 tax return or the average of the three financial years prior to and including 2018/19)
    • If they are newly self-employed and set up business from 6th April 2019 (relating to the above point)
    • If they didn’t submit their 2018–19 self-assessment by 23rd April
    • Those who were on maternity leave during the three-year period of average profits have a reduced allowance
  • Freelancers and short-term contractors excluded from CRJS / SEISS
    • If they were not in a contract at the cut-off date
    • If more than half of their income hasn’t come from self-employment
    • If their employer couldn’t keep them on the payroll until support became available
    • If their employer doesn’t apply for the scheme(s) on their behalf
  • Other circumstances excluding some workers from CRJS
    • PAYE Tronc payments are not counted (e.g. tips which are collected electronically and included in payslips)
    • Discretionary commission is not included
    • If employees are made redundant, unless a previous employer prior to 19th March chooses to furlough them
    • Employees who stop work for personal reasons (e.g. caring for school children)

Statistics from HMRC and Office of National Statistics have been used to estimate that around three million people in the UK are exempt from support. Excluded UK created the below graphic to highlight the expected numbers of groups affected.

 

ExcludedUK graph of excluded taxpayers

The government’s latest report states that during the pandemic, they have paid ‘the wages of almost 12 million people, supported over a million businesses through grants, loans and rates cuts.’ However, there’s now a clear focus on trying to recover the economy to reduce the need for such schemes.

 

The government’s response to criticism

Rishi Sunak, Chancellor of the Exchequer, has stated from the beginning of the crisis that the government will do whatever it takes to protect people and businesses. He has since addressed the prevalent gaps by reinforcing the number of people receiving support, and that not every group of people can be helped.

The reasons for ineligibility largely relate to payroll legislation like RTI and tax returns. Criteria were put in place to prevent fraud by ensuring an employee’s or business’s claim can be validated. This comes after it was revealed HMRC received 3,000 complaints around ‘furlough fraud’.

Around 150 MPs have openly opposed the decision to not roll out support for the groups left behind, joining forces in the ExcludedUK All-Party Parliamentary Group.

Jamie Stone (@Jamie4North), Liberal Democrat MP For Caithness, Sunderland and Easter Ross, has been at the forefront of the campaign, tweeting:

“Rishi said to businesses “If you stand by your workers, we will stand by you.” If you were committed to businesses and workers, you wouldn’t have abandoned New Starters, Small Ltd Companies, or the Self-Employed”

 

Moving forwards

The government’s focus moving forwards is to get the economy opening up again and to encourage employers to bring staff back to work. The assumption is that by getting things back to normal, or a ‘new normal’, the gaps will be plugged sooner or later.

However, a knock-on effect of the economic impact is mass unemployment and a shrunken job market. The Chancellor announced the government’s plan to tackle this on 9th July in the mini budget, including investment in infrastructure and green jobs; incentivisation to bring furloughed employees back to work; encouragement of apprenticeships; and schemes to encourage the public to ‘Eat Out to Help Out’.

It’s expected that things will get worse before they get better, with redundancies on the horizon as the furlough scheme begins to require employer contributions from August and eventually draws to a close in October.

Campaign groups across social media continue to lobby key officials in order to demand support. Martin Lewis of MoneySavingExpert has followed efforts throughout and has stated on multiple occasions that it’s unlikely change will be made. However, on 15th July, he joined campaigners and a cross-party group of MPs to spread the word about those who haven’t received financial help. Rishi Sunak responded to pleas by stating his focus is “looking forward” and protecting jobs. A further campaign to raise awareness has since been announced by Excluded UK.

Stay up to date on the latest payroll news through our News section.

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