Tag Archive for Self-Employed

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Reprieve for self-employed having to report tax quarterly

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By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Millions of self-employed will not have to start reporting their tax income quarterly to the taxman from April 2023 as planned.

Bowing to pressure, ministers have postponed overhauling personal tax for the self-employed for another year, in what has been called the biggest shakeup in 25 years.

Making Tax Digital was scheduled to make 4.3m self-employed and small business owners keep digital records and report their income to HMRC every quarter rather than annually from April 2023.

Instead, the measures will now come into place in April 2024, the Government announced on Thursday.

Self-employed tax burden

Ministers have bowed to pressure after complaints that rolling out Making Tax Digital to any self-employed person earning over £10,000 a year would be another administrative burden coming on top of coronavirus and the shaky recovery.

“The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the past year,” Lucy Frazer, newly appointed financial secretary to the Treasury, said in a written ministerial statement.

HMRC is pushing for the self-employed to complete their tax returns every quarter to reduce the number of inaccuracies – either

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Hot Business News Today

Reprieve for self-employed having to report tax quarterly

by  •  • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Millions of self-employed will not have to start reporting their tax income quarterly to the taxman from April 2023 as planned.

Bowing to pressure, ministers have postponed overhauling personal tax for the self-employed for another year, in what has been called the biggest shakeup in 25 years.

Making Tax Digital was scheduled to make 4.3m self-employed and small business owners keep digital records and report their income to HMRC every quarter rather than annually from April 2023.

Instead, the measures will now come into place in April 2024, the Government announced on Thursday.

Self-employed tax burden

Ministers have bowed to pressure after complaints that rolling out Making Tax Digital to any self-employed person earning over £10,000 a year would be another administrative burden coming on top of coronavirus and the shaky recovery.

“The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the past year,” Lucy Frazer, newly appointed financial secretary to the Treasury, said in a written ministerial statement.

HMRC is pushing for the self-employed to complete their tax returns every quarter to reduce the number of inaccuracies – either

Read more...

Hot Business News Today

5 most common tax mistakes when you’re self-employed

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Originally written by Simon Thomas on Small Business
What’s worse when you’re self-employed? Having to pay your tax bill, or making a mistake and finding out you’ve overpaid?
Filing your small business taxes each year does not have to be stressful or painful. Tax can be a bit of a headache for anyone in business, and for the self-employed, it’s no different. The danger of getting taxed wrongly could mean submitting tax returns late, incorrectly, or not at all, leading to some hefty penalties and time-consuming investigations from HMRC.
>See also: How the newly self-employed should navigate the complex SEISS process
However, if you make sure to do little bits of work throughout the year, filing your taxes can be quite straightforward.
5 most common tax mistakes when you’re self-employed
Some stresses are easily avoidable. Make sure to avoid these 5 common tax return mistakes that many self-employed people make:
#1 – Not registering for self-assessment
If you earn more than £1,000 from one or more trades, you must register with HMRC. People commonly confuse this with the basic personal allowance and believe they do not need to register with HMRC unless they earn over a certain threshold.
This, however, isn’t the case.
Everyone is entitled to earn a certain

Read more...

Hot Business News Today

5 most common tax mistakes when you’re self-employed

by  •  • 0 Comments

Originally written by Simon Thomas on Small Business
What’s worse when you’re self-employed? Having to pay your tax bill, or making a mistake and finding out you’ve overpaid?
Filing your small business taxes each year does not have to be stressful or painful. Tax can be a bit of a headache for anyone in business, and for the self-employed, it’s no different. The danger of getting taxed wrongly could mean submitting tax returns late, incorrectly, or not at all, leading to some hefty penalties and time-consuming investigations from HMRC.
>See also: How the newly self-employed should navigate the complex SEISS process
However, if you make sure to do little bits of work throughout the year, filing your taxes can be quite straightforward.
5 most common tax mistakes when you’re self-employed
Some stresses are easily avoidable. Make sure to avoid these 5 common tax return mistakes that many self-employed people make:
#1 – Not registering for self-assessment
If you earn more than £1,000 from one or more trades, you must register with HMRC. People commonly confuse this with the basic personal allowance and believe they do not need to register with HMRC unless they earn over a certain threshold.
This, however, isn’t the case.
Everyone is entitled to earn a certain

Read more...

Hot Business News Today

Self-employed to be offered fourth and final £7,500 grant in Budget

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Originally written by Timothy Adler on Small Business
Rishi Sunak is set to announce a fourth and final round of the £7,500 grant for the self-employed in next week’s Budget.
As before, certain self-employed will be able to claim a Self-Employment Income Support Scheme (SEIISS) grant worth up to £7,500 over three months covering February, March and April.
However, if true, next week’s announcement again ignores the over a million people who have been excluded from self-employed grants because either they have a parallel source of income or they pay themselves in dividends or they earn over £50,000 a year.
Last month, influential thinktank the Institute for Fiscal Studies (IFS) said the Government should act to help self-employed excluded from Covid support because more than 50 pe cent of their income came from elsewhere, an exclusion which disproportionately attacked women on modest incomes.
>See also: Government must help self-employed excluded due to 50% income rule
Meanwhile, business groups have written to Mr Sunak urging him to help the nearly 800,000 company directors frozen out of emergency Covid-19 support, which they saw as a stealth attack by HMRC because company directors pay corporation tax at the lower 19 per cent rate.
However, according to the Telegraph, the grant

Read more...

Hot Business News Today

Self-employed to be offered fourth and final £7,500 grant in Budget

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Originally written by Timothy Adler on Small Business
Rishi Sunak is set to announce a fourth and final round of the £7,500 grant for the self-employed in next week’s Budget.
As before, certain self-employed will be able to claim a Self-Employment Income Support Scheme (SEIISS) grant worth up to £7,500 over three months covering February, March and April.
However, if true, next week’s announcement again ignores the over a million people who have been excluded from self-employed grants because either they have a parallel source of income or they pay themselves in dividends or they earn over £50,000 a year.
Last month, influential thinktank the Institute for Fiscal Studies (IFS) said the Government should act to help self-employed excluded from Covid support because more than 50 pe cent of their income came from elsewhere, an exclusion which disproportionately attacked women on modest incomes.
>See also: Government must help self-employed excluded due to 50% income rule
Meanwhile, business groups have written to Mr Sunak urging him to help the nearly 800,000 company directors frozen out of emergency Covid-19 support, which they saw as a stealth attack by HMRC because company directors pay corporation tax at the lower 19 per cent rate.
However, according to the Telegraph, the grant

Read more...

Hot Business News Today

What the Uber ruling means for your small business

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Originally written by Jill Bottomley on Small Business
Last week’s long-awaited Supreme Court ruling in the Uber case has far reaching ramifications for any small business that engages self-employed individuals, in all sectors.
Drivers, engaged by Uber on a self-employed basis, brought a claim that they were not in fact self-employed; instead, they claimed they were “workers” and were therefore entitled to statutory pay, compliant with the National Minimum Wage (NMW) for all “working” time. Included in the claim were rights to statutory benefits, such as paid holidays.
And the court has ruled in the drivers’ favour, potentially costing Uber up to £20,000 per driver.
Uber’s defence was that its arrangement with drivers was typical of the private hire or “gig-economy” industry.
However the implications of the ruling may extend to any which currently engages self-employed consultants or independent contractors.
>See also: What are the benefits of agile working? – a small business guide
The crux of the issue
Many would imagine that a someone found to be a “worker” in this case would be classed as an employee, not as self-employed. However, confusion on these categorisations is where the crux of the whole issue lies.
A worker is not the same as an employee. The status can best

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Hot Business News Today

Government must help self-employed excluded due to 50% income rule

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Originally written by Timothy Adler on Small Business
The government should act to help self-employed excluded from Covid support because more than 50% of their income comes from elsewhere.
This deliberate exclusion is unfair and disproportionately attacks women on modest incomes, says the influential Institute for Fiscal Studies (IFS).
This is the second time the IFS has waded into the argument about the self-employed in as many days. Yesterday, the IFS published a report calling for the self-employed to pay more tax.
>See also: You should file your tax return by January 31, despite HMRC extension
Over a million self-employed people who have less than 50% of their income coming from self-employment have been excluded from the Self-Employment Income Support Scheme (SEISS).
The IFS says that it is manifestly unfair that someone who declares profits of 51 per cent from self-employed income can claim the maximum, while those who claim 49 per cent of profits get nothing.
SEISS provides payments once per quarter worth 80 per cent of pre-pandemic profits up to a cap of £7,500 (per quarter) for eligible self-employed workers who have been adversely affected by the pandemic.
The scheme is expected to have cost £28bn by April 2021, making emergency Covid payments to at least

Read more...

Hot Business News Today

Government must help self-employed excluded due to 50% income rule

by  •  • 0 Comments

Originally written by Timothy Adler on Small Business
The government should act to help self-employed excluded from Covid support because more than 50% of their income comes from elsewhere.
This deliberate exclusion is unfair and disproportionately attacks women on modest incomes, says the influential Institute for Fiscal Studies (IFS).
This is the second time the IFS has waded into the argument about the self-employed in as many days. Yesterday, the IFS published a report calling for the self-employed to pay more tax.
>See also: You should file your tax return by January 31, despite HMRC extension
Over a million self-employed people who have less than 50% of their income coming from self-employment have been excluded from the Self-Employment Income Support Scheme (SEISS).
The IFS says that it is manifestly unfair that someone who declares profits of 51 per cent from self-employed income can claim the maximum, while those who claim 49 per cent of profits get nothing.
SEISS provides payments once per quarter worth 80 per cent of pre-pandemic profits up to a cap of £7,500 (per quarter) for eligible self-employed workers who have been adversely affected by the pandemic.
The scheme is expected to have cost £28bn by April 2021, making emergency Covid payments to at least

Read more...

Hot Business News Today

Self-employed should pay equal tax with employees, says top thinktank

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Originally written by Timothy Adler on Small Business
The self-employed and small business owners should pay as much tax as the employed, influential think-tank the Institute for Fiscal Studies argues.
The current tax system does not really work for anybody, says the IFS in its report published today. The self-employed pay National Insurance and income tax at lower levels than their employed counterparts – often when they are doing the same job for companies.
The government is losing £15bn in tax revenue annually through the self-employed paying less tax, said the IFS.
>See also: You should file your tax return by January 31, despite HMRC extension
“There is a large, unjustified and problematic bias against employment and labour incomes and in favour of business ownership,” said the report. “The differential tax rates create inefficiency, unfairness, complexity and revenue loss.”
The IFS report said that for a job earning £40,000, a full-time employee could pay up to £4,300 more in tax than if the same work was done by someone with their own company.
And if you’re a self-employed partner in the financial services industry on a £308,000 average salary, you pay £20,000 less tax each year than someone doing the same job as a full-time employee.
Tax policy

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