Question to the HM Treasury:

To ask Her Majesty's Government what plans they have to (1) remove the £50,000 earnings cap for those self-employed people who may claim a grant through the COVID-19 Self-employment Income Support Scheme, and (2) provide support for self-employed people who run as limited companies and pay themselves in dividends, not PAYE, during the COVID-19 pandemic.

Some 95% of people who receive the majority of their income from self-employment could be eligible for the Self-Employment Income Support Scheme (SEISS), based on 2017-18 data. The scheme, including the £50,000 threshold, is designed to be targeted at those who need it the most, and who are most reliant on their self-employment income. The self-employed are a very diverse population. They have a wide mix of turnover and profits, with monthly and annual variations even in normal times. Some may see their profits unaffected by the current situation, while others have substantial alternative forms of income: for example, those who had more than £50,000 from self-employment profits in 2017-18 had an average total income of more than £200,000. The self-employed can also offset losses against profits in other years and other forms of income.

Income from dividends is a return on investment in the company, rather than wages, and is not eligible for support. Under current reporting mechanisms it is not possible for HM Revenue and Customs to distinguish between dividends derived from an individual’s own company and dividends from other sources, and between dividends in lieu of employment income and as returns from other corporate activity. Expanding the scope would require HMRC to collect and verify new information. This would take longer to deliver and put at risk the other schemes which the Government is committed to delivering as quickly as possible.

Individuals who are not eligible for the SEISS may be able to access other support Government is providing, including the Bounce Back Loans Scheme for small businesses, the Coronavirus Business Interruption Loan Scheme, and the deferral of tax payments. More information about the full range of business support measures is available on GOV.UK.