Rishi Sunak cuts short US trip due to Omicron crisis
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Self-employed workers are facing troubling months ahead as economic instability looms and as such, the Association of Independent Professionals and the Self Employed (IPSE) has urged the Government to act. Specifically, the IPSE has called for the oncoming National Insurance hike to be delayed and for existing taxes to be cut.
As the infection rate of the Omicron variant rises, IPSE has warned that unless the Government offers support to self-employed people by delaying planned increases to National Insurance and bringing back the five percent VAT rate for the hospitality sector, then thousands will face financial hardship.
As individuals scale back their plans and limit their economic activity in line with the Government’s advice, IPSE warned it is highly likely that work opportunities for the self-employed will scale back with it. Therefore, IPSE called for changes to existing tax plans and improvements in state support.
IPSE pushed the Government to delay its planned implementation of the increase to National Insurance and dividend taxation, expected to come in from April. It also called for the five percent VAT rate to return for the hospitality sector.
Additionally, the DWP has been urged to suspend the Minimum Income Floor for Universal Credit which directly impacts self-employed claimants.
In terms of specific coronavirus support measures, IPSE argued the introduction of a suite of discretionary, optional concessions for Bounce Back Loan repayments would be beneficial.
With the SEISS scheme in mind, IPSE said the Government could also consider the design of financial support schemes to identify ways to include previously excluded groups, in the unwelcome event that they become necessary, and the state could extend Statutory Sick Pay (SSP) to sole traders.
Andy Chamberlain, Director of Policy at IPSE, commented: “IPSE has always said the Covid pandemic isn’t just a health crisis – it is also an economic one. Rising infection rates are set to have a devastating financial impact on freelancers and self-employed workers, who have already lost savings and work after previous COVID-19 impacts.
“The Government can reassure our smallest businesses by implementing a series of measures that will help many survive this challenging period. That is why we have written to the Chancellor asking him to roll out a suite of measures that bring some degree of confidence to the sector.
“Delaying planned tax hikes, making Universal Credit more accessible, introducing further flexibility to Bounce Back Loan repayments, ensuring everyone – not just the employed – can access Statutory Sick Pay and reintroducing the five percent VAT rate for hospitality could enable thousands of businesses to survive these extremely challenging circumstances.”
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The need for this support and respite could not be more needed for many self-employed workers, who face burnout and looming tax obligations. Self Assessment tax returns, which are completed mainly by the self-employed, are due by January 31, 2022.
While this may seem like plenty of time, existing evidence suggested many workers will attempt to complete their returns over the holiday period, adding additional stress.
Last year, 31,400 taxpayers submitted Self Assessment tax returns between December 24-26 ; with 20,200 tax returns submitted on Christmas Eve, 2,700 submitted on Christmas Day and a further 8,500 filed on Boxing Day. Many experts have warned against doing this this winter as the Government will be hard to reach over Christmas and it will be difficult to process returns.
This is the last thing self-employed workers will need, with research from FreeAgent showing over half (51 percent) of small business owners polled said they experienced burnout since the start of the pandemic and over a third (35.8 percent) said they are working longer hours. In light of this, FreeAgent said it is “critical” that this group takes a “well needed” break over the festive period.
Fortunately, FreeAgent issued guidance to self-employed workers to help them and ensure tax returns are filed away with plenty of time.
Roan Lavery, CEO and co-founder of FreeAgent, commented: “Small Business owners and self-employed people have been hit the hardest over the last 24 months with the impact of both Covid-19 and Brexit.
“In fact our own research recently revealed that over one in four (26 percent) of UK SME owners said that Brexit has had a negative impact on their business, with the main consequences being losing customers (57 percent), supply chain issues (43 percent), increased costs of goods and services (42 percent) and talent shortages (16 percent).
“As well as this, we also found that there has been a mental health impact on small business owners since the start of the pandemic with over half (51 percent) of small business owners polled said they have experienced burnout since the start of the pandemic and over a third (35.8 percent) say they are working longer hours. It’s critical that this year more than ever before that this group takes a well needed break over the festive period.”
To ensure workers don’t miss the Self Assessment deadline, Mr Lavery went on to provide advice to business owners. The first tip concerned getting workers online.
Self-employed workers were urged to register with HMRC and give themselves a few weeks to complete the process. HMRC data showed more than 10.7 million customers completed a tax return by January 31, 2021, and of those, 96 percent submitted it online. With the deadline coming up – this is the quickest way to complete the process.
Workers should also make sure they’ve gathered all their relevant files. They’ll need to gather all their relevant information before they can file your tax return. Depending on their circumstances, this could include proof of self-employed income, a P60, P45 or a P11D. Mr Lavery explained: “As a basic rule, you’ll need to show any money you’ve received or earned from pretty much anywhere – including wages from a job, income from a trust, and interest from your bank account (except an ISA). If you’re a limited company shareholder, you’ll also need to provide proof of any dividends received during the tax year.
“You don’t want to be gathering this paperwork at the last minute, so make sure this is all in order ahead of time.”
He concluded: “Make sure to consult HMRC’s website or get help from a professional accountant or tax advisor to make sure you understand all of the regulations in place specific to your business.
“If you keep your accounts up to date all year, then this will help you to avoid having to rush to meet the deadline for filing your tax return. This way you can enjoy your festive break with nothing hanging over your head!”
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