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
Tag Archive for Sole trader
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What the Uber ruling means for your small business
by Jill Bottomley • • 0 Comments
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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Prospect union calls for emergency help for excluded self-employed
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Prospect union, recognising the plight of the 3m self-employed excluded from government Covid support, has devised an emergency plan.
Its Self-Employment Stabilisation Scheme (SESS) would bolt onto the existing Self Employment Income Support Scheme (SEISS) and offer help for the millions of Britons who have fallen through the cracks in government support, through no fault of their own.
Reasons for exclusion include being a company director or not having three years’ worth of accounts to submit to HMRC.
>See also: Liverpool launches £9.5m grant fund for ‘excluded’ self-employed
Prospect general secretary Mike Clancy called the Treasury’s treatment of the 3m excluded self-employed “disgraceful”, given how the government has encouraged self-employment and entrepreneurialism in the past.
The SESS would close existing gaps in the SEISS scheme and would introduce sectoral funds in areas with large freelance workforces, such as the creative industries.
In particular, the SESS proposes:
Allowing those who submit tax returns in January 2021 to access the fourth round of SEISS
A Freelancers Fund to support employers in sectors with large freelance workforces (such as creative industries) to take on freelance workers
Allow those who earn less than half their income through self-employment or earn more than £50,000 per annum
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City mayors warn of mental health pandemic among self-employed
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Three mayors of England’s biggest cities have written to Rishi Sunak calling him to help the 3m self-employed excluded from Covid business support.
London mayor Sadiq Khan, Manchester mayor Andy Burnham and Liverpool mayor Steve Rotheram have urged the chancellor to help those who have fallen through the cracks of the self-employed income support scheme (SEISS).
Otherwise, warned Mr Burnham, England faces “a mental health pandemic on top of Covid”.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
It is estimated that 10 per cent of the UK workforce have found themselves excluded from Covid-19 support, according to pressure group ExcludedUK.
Mr Burhnam said: “We’re here together to send a message to the chancellor that it’s no exaggeration to say that jobs, homes and marriages are hanging in the balance … this is so wrong on so many levels”.
The Manchester mayor said the government’s cold shoulder for those who have just taken the plunge and gone self-employed, doing just what the government wants, sends the wrong message about becoming an entrepreneur.
Mr Burnham said that there were just days left to get the message across to the chancellor before his government spending
Hot Business News Today
City mayors warn of mental health pandemic among self-employed
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Three mayors of England’s biggest cities have written to Rishi Sunak calling him to help the 3m self-employed excluded from Covid business support.
London mayor Sadiq Khan, Manchester mayor Andy Burnham and Liverpool mayor Steve Rotheram have urged the chancellor to help those who have fallen through the cracks of the self-employed income support scheme (SEISS).
Otherwise, warned Mr Burnham, England faces “a mental health pandemic on top of Covid”.
>See also: 1m self-employed face having to pay tax bill larger than what they earnt
It is estimated that 10 per cent of the UK workforce have found themselves excluded from Covid-19 support, according to pressure group ExcludedUK.
Mr Burhnam said: “We’re here together to send a message to the chancellor that it’s no exaggeration to say that jobs, homes and marriages are hanging in the balance … this is so wrong on so many levels”.
The Manchester mayor said the government’s cold shoulder for those who have just taken the plunge and gone self-employed, doing just what the government wants, sends the wrong message about becoming an entrepreneur.
Mr Burnham said that there were just days left to get the message across to the chancellor before his government spending
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Halt rollout of Making Tax Digital to smallest businesses, urge MPs
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The rollout of Making Tax Digital, HMRC’s rolling scheme for businesses to self-report tax owed, should be halted before it reaches the smallest of businesses.
So says the cross-party public accounts committee in its report on bridging the £31bn tax gap between tax owed and what actually comes into the Treasury’s coffers.
MPs warned that it was unclear whether the controversial rules had achieved their stated aim of reducing tax errors.
>See also: Making Tax Digital bridging software: what is it and how much does it cost?
Since April 2019, VAT-registered businesses and the self-employed people with a turnover in excess of the £85,000 VAT threshold have been forced to use accounting software when they file their returns.
From April 2022, HMRC wants all VAT-registered businesses to adhere to Making Tax Digital. Self-employed people and landlords with a turnover of more than £10,000 will face the extra requirements from 2023.
Critics say the cost of applying the new rules has been unreasonably high. A report by trade body Association of Taxation Technicians found that some small businesses had been forced to spend more than £5,000 on software and training.
>See also: Five steps for small businesses Making Tax Digital
Extending the
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Why the Government’s new insolvency bill is bad news for sole traders
by Simon Dolan • • 0 Comments
Originally written by Simon Dolan on Small Business
Earlier this month, aviation millionaire Simon Dolan, who is worth £200m according to the Sunday Times Rich List, lost his bid to bring a High Court challenge against the Government over the coronavirus response. He is appealing against the against the decision denying him permission to bring a judicial review over lockdown.
When I first initiated legal proceedings against the Government over the introduction of lockdown, the last thing I thought I would be talking about is the changes to the Insolvency Act, and yet these changes are fundamental, regressive, and without doubt will lead to far more issues – all in a vain attempt to prop up the economy for a few more weeks.
Yet, as an accountant with over 30 years’ worth of experience in the industry, I have looked on in horror over the last few months as the Corporate Insolvency and Governance Act breezed through the Commons and Lords without any adequate scrutiny and became law two weeks ago.
>See also: How to deal with a furloughed employee who refuses to return to work
What the Corporate Insolvency and Governance Act means
In the round, the introduction of the Corporate Insolvency and Governance Act
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IR35 freelance tax changes will go ahead in April 2021 – are you ready?
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Government has voted through IR35 reform, which will bring millions of freelancers and contractors into pay-as-you-earn from April 2021.
IR35 puts the onus on employers to decide whether freelance contractors should pay national insurance will take effect from April 21 2021.
Contractors argue that although they will be taxed like regular PAYE employees, they will have none of the benefits of full-time staff, being both still on short-term contracts with no paid holiday.
>See also: Taxman will not fine you for getting things wrong with IR35 within first year
What is IR35 and how does it affect me?
Currently, contractors assess their own tax status, but impending reforms coming into force from April 6 2021 will shift this responsibility to hiring businesses.
The Government has proposed the changes to contracting tax rules in the private sector to combat what it calls “disguised employment”, where contractors do essentially the same work as employees but play less tax and reduced national insurance contributions.
Currently freelance contractors, one-man-band limited companies who work on projects for companies, pay corporation tax at 20 per cent instead of higher PAYE rates, while employers duck national insurance contributions. The Treasury sees both freelancers and employers as
Hot Business News Today
IR35 freelance tax changes will go ahead in April 2021 – are you ready?
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Government has voted through IR35 reform, which will bring millions of freelancers and contractors into pay-as-you-earn from April 2021.
IR35 puts the onus on employers to decide whether freelance contractors should pay national insurance will take effect from April 21 2021.
Contractors argue that although they will be taxed like regular PAYE employees, they will have none of the benefits of full-time staff, being both still on short-term contracts with no paid holiday.
>See also: Taxman will not fine you for getting things wrong with IR35 within first year
What is IR35 and how does it affect me?
Currently, contractors assess their own tax status, but impending reforms coming into force from April 6 2021 will shift this responsibility to hiring businesses.
The Government has proposed the changes to contracting tax rules in the private sector to combat what it calls “disguised employment”, where contractors do essentially the same work as employees but play less tax and reduced national insurance contributions.
Currently freelance contractors, one-man-band limited companies who work on projects for companies, pay corporation tax at 20 per cent instead of higher PAYE rates, while employers duck national insurance contributions. The Treasury sees both freelancers and employers as
Hot Business News Today
Small businesses call for HMRC to delay IR35 tax change
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Small businesses have called for the Treasury to delay its controversial IR35 tax change, which is meant to clampdown on employees passing themselves off as freelancers in order to avoid tax.
The government has already restricted freelancers working full-time in the public sector as contractors, which means they pay less tax than equivalent employees. As employers are the ones who face penalties if they categorise full-time contractors wrongly, it makes hiring sole traders less appealing.
>See also: How to wind up your personal service company ahead of IR35 legislation
Now the Treasury wants to extend its IR35 legislation to the private sector in April 2020.
Mike Cherry, national chairman of the FSB, said: “The self-employed certainly don’t need an IR35 rule change that makes hiring contractors less attractive. We’ve already heard noises from big corporates to indicate that, if this change does take effect in April as planned, they’ll pull the plug on sole traders.
“Common sense dictates that a delay to the April roll-out of these rules is now needed.”
Back in September, chartered accountants also called for the IR35 tax change to be delayed. The Institute of Chartered Accountants in England and Wales (ICAEW) said the date