Closed petition Waive the January 2021 tax bill for those who have been excluded from the SEISS

The Government have seemed unwilling to revisit the criteria of the SEISS. According to their own statistics 1.6 million people have received nothing since March 2020. Those people have struggled, unaided, to survive and are now being faced with a bill from the Government. Waive this bill for them.

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The Government's own statistics also state that only 11% of the 1.6 million were excluded due to making over £50,000 so the vast majority of people excluded are in the basic tax rate. Waiving this tax bill will, for most, amount to less than 20% of their trading profits. Their colleagues have received 80% of trading profits. It is the least the Government can do to offer these people 1/4 of the help afforded to others.

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Government responded

This response was given on 27 April 2021

The Government does not believe waiving tax bills would provide value for money as a mechanism to support for those ineligible for SEISS. A wider £352bn package is in place.

Read the response in full

In designing and delivering the SEISS, the Government prioritised delivering a scheme to support the self-employed, while protecting against fraud or abuse. This involved making difficult decisions to introduce eligibility criteria that were vital in ensuring the scheme worked for the vast majority of the self-employed. As the National Audit Office acknowledged, however, the Government was right to introduce the SEISS, which has been successful in helping to support millions of people.

The design of the SEISS means it is targeted at individuals with low income and those who are most reliant on their self-employment income. This provides value for money to the taxpayer whilst reaching as many people as possible.

During the design stage of the scheme, the Government engaged with a range of industry groups. These were supportive of a higher threshold that required at least 60 per cent of income to come from self-employment: significantly less generous than the 50 per cent threshold that the Government ultimately used. Waiving the tax bills of anyone ineligible for the SEISS would not provide value for money by targeting support at those who need it most.

The Government understands that many self-employed people are facing considerable pressures. To support them, this year HMRC gave individual taxpayers an extra month to file their tax returns without incurring late filing penalties. Late filing penalties were subsequently not issued for online tax returns received by 28 February.

Building on support offered by the Self-Assessment tax deferral in July, the Government provided further support to the self-employed by giving those who need it more time to pay taxes due in January, through HMRC’s enhanced Time to Pay (TTP) ‘self-service’ facility.

Taxpayers with up to £30,000 of Self-Assessment liabilities due can use the ‘self-service’ Time to Pay facility to secure a plan to pay this over an additional 12 months. This means that in some cases, Self-Assessment liabilities that were due in July 2020 will not need to paid in full until January 2022. Any Self-Assessment taxpayer who is not able to pay their tax bill on time can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan. Normally, a 5 per cent late payment penalty is also charged on any unpaid tax that is still outstanding on 3 March. But this year, because of the pandemic, HMRC are giving taxpayers more time to pay or set up a payment plan.

Throughout the crisis, the Government’s priority has been to protect lives and livelihoods, providing a wide-ranging economic response that is one of the most substantial globally and taking unprecedented steps to support families, businesses and the most vulnerable. This includes support for the self-employed through the SEISS, which received claims from 2.7 million individuals across the first three grants, totalling over £19.7 billion.

The Government announced at Budget 2021 that the SEISS will continue until September, with a fourth and a final fifth grant. The Government also announced a major improvement in access to the SEISS. As the deadline for 2019-20 tax returns has now passed, HMRC will use these tax returns for the fourth and fifth grants, provided they were submitted by 2 March. This means more than 600,000 people may now be able to claim the fourth and fifth grants, bringing the total number of people who could be eligible to 3.7 million.

The fourth SEISS grant, available to claim from late April, will be paid out in a single instalment covering 80 per cent of three months’ worth of average annual profits, and capped at £7,500. The fifth grant, covering May to September, will include a turnover test to ensure that the most generous support is targeted at those who need it the most. This will determine whether individuals can continue to receive a grant worth 80 per cent of three months’ average trading profits, capped at £7,500 or a 30 per cent grant, capped at £2,850. The final grant can be claimed from late July.

Those ineligible for the SEISS may still be eligible for other elements of the support available. The temporary £20 per week increase to the Universal Credit standard allowance has been extended for six months, and the Government has decided to extend the suspension of the Minimum Income Floor to the end of July 2021, so that where self-employed claimants' earnings have fallen significantly, their Universal Credit award will have increased to reflect their lower earnings. In addition to this, they may also be able to access other elements, including Restart Grants, the Recovery Loan scheme, business rates relief, and other business support schemes.

HM Treasury
This is a revised response. The Petitions Committee requested a response which more directly addressed the request of the petition. You can find the original response towards the bottom of the petition page (https://petition.parliament.uk/petitions/565074)

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Original Government response

The Government keeps income tax rates under review and any decisions are taken as part of the annual Budget process. A wider £280bn package is in place to help support those ineligible for the SEISS.

As with all aspects of the tax system, the Government keeps income tax rates under review and any decisions on future changes will be taken as part of the annual Budget process in the context of the wider public finances.

The Government understands that many self-employed people are facing immense pressures. To support them this year, HMRC gave people an extra month to file their tax returns without issuing late filing penalties, to help taxpayers and agents who are unable to meet the deadline. Late filing penalties will now not be issued for online tax returns received by 28 February. This gives taxpayers the breathing space they need to complete their returns without worrying about receiving a penalty.

Building on support offered by the Self-Assessment tax deferral offered in July, the Government is providing further support to the self-employed and other taxpayers in Self-Assessment by giving those who need it more time to pay taxes due in January through HMRC’s enhanced Time to Pay (TTP) ‘self-service’ facility.

Taxpayers with up to £30,000 of Self-Assessment liabilities due can use the ‘self-service’ Time to Pay facility to secure a plan to pay this over an additional 12 months. This means that in some cases, Self-Assessment liabilities that were due in July 2020 will not need to paid in full until January 2022. Any Self-Assessment taxpayer who is not able to pay their tax bill on time, including those who can’t use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.

Throughout the crisis, the Government’s priority has been to protect lives and livelihoods, providing a wide-ranging economic response that is one of the most substantial globally and taking unprecedented steps to support families, businesses and the most vulnerable. This includes support for self-employed individuals through the Self-Employment Income Support Scheme (SEISS) which, as of 31 December, had received claims from around 2.7m self-employed individuals across the first three grants, totalling over £18.9bn.

In designing and delivering the SEISS, the Government prioritised delivering support to as many people as possible while guarding against the risk of fraud or abuse. This meant making difficult decisions, and the Government recognises that some of the eligibility criteria and conditions that were vital to ensuring that these schemes work for the vast majority meant that some people did not qualify.

However, as the National Audit Office report acknowledged, the Government was right to introduce the SEISS, which has been successful in helping to protect the livelihoods of millions of people and is just one element of a wider £280 billion package of unprecedented support.

Those ineligible for the SEISS may still be eligible for other elements of the support available. The Universal Credit standard allowance has been increased for 2020-21 and the Minimum Income Floor temporarily relaxed, so that where self-employed claimants' earnings have fallen significantly, their Universal Credit award will have increased to reflect their lower earnings. In addition to this, they may also be able to access other elements of the package, including Bounce Back loans, tax deferrals, rental support, mortgage holidays, self-isolation support payments and other business support grants.

For example, the Government has introduced the Local Restrictions Support Grant (LRSG) (Closed), giving businesses forced to close due to national or local restrictions up to £3,000 per month. In addition, these businesses will benefit from one-off grants of up to £9,000 as announced on 5 January. Similarly, where local areas were subject to enhanced restrictions on socialising, in particular a ban on indoor household mixing, LAs will receive funding that will enable them to make grants to hospitality, leisure, and accommodation businesses worth up to £2,100 per month.

Businesses which are not eligible for the grants for closed businesses may be able to benefit from funding from the Additional Restrictions Grant. The Government recently increased the funding available under this scheme to £1.6 billion across England. It is up to each local authority to determine eligibility for this scheme based on their assessment of local economic need; the Government encourages local authorities to support businesses which have been impacted by restrictions, but which are ineligible for the other grant schemes.

During this difficult time the Treasury will continue to work closely with employers, delivery partners, industry groups and other Government departments in order to understand and address the long-term effects of Covid-19 and the challenges it poses to the wider economy.

HM Treasury
This response was given on 24 February 2021. The Petitions Committee then requested a revised response, that more directly addressed the request of the petition.