Originally written by Timothy Adler on Small Business
One million of the UK’s 4.5m self-employed face having to prepay tax bills higher than what they actually earned this year.
Many freelancers pay self-assessment tax bills on account twice a year, with the first prepayment falling due this January.
This is despite the Covid pandemic decimating many self-employed profits since March.
>See also: MPs to fight Sunak over move to hike national insurance for self-employed
The problem is that prepayments are based on the previous year’s profits, in this case what the self-employed earned in 2019-20 – before the pandemic hit.
TaxScouts, an online self-assessment tax service provider, estimated 1m people could be hit with an inflated tax bill because payment on account is based on the previous year’s earnings.
“While this is well and good in normal times, it doesn’t take into consideration the huge loss of earnings that so many of the self employed will have faced during the pandemic,” said TaxScouts.
However, anticipating the problem, HMRC has allowed the self-employed to defer payment on account and to request a reduction in their tax bill if they are facing financial difficulty and know their earnings will be down.
>See also: MPs urge Government to do more to help
Tag Archive for Self-Employed Income Support Scheme
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1m self-employed face having to pay tax bill larger than what they earnt
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
One million of the UK’s 4.5m self-employed face having to prepay tax bills higher than what they actually earned this year.
Many freelancers pay self-assessment tax bills on account twice a year, with the first prepayment falling due this January.
This is despite the Covid pandemic decimating many self-employed profits since March.
>See also: MPs to fight Sunak over move to hike national insurance for self-employed
The problem is that prepayments are based on the previous year’s profits, in this case what the self-employed earned in 2019-20 – before the pandemic hit.
TaxScouts, an online self-assessment tax service provider, estimated 1m people could be hit with an inflated tax bill because payment on account is based on the previous year’s earnings.
“While this is well and good in normal times, it doesn’t take into consideration the huge loss of earnings that so many of the self employed will have faced during the pandemic,” said TaxScouts.
However, anticipating the problem, HMRC has allowed the self-employed to defer payment on account and to request a reduction in their tax bill if they are facing financial difficulty and know their earnings will be down.
>See also: MPs urge Government to do more to help
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MPs to fight Sunak over move to hike national insurance for self-employed
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
MPs plan to fight chancellor Rishi Sunak over his move to increase National Insurance tax for the self-employed, bringing it into line with PAYE.
Back in March, the chancellor hinted that he wanted to increase NI for the self-employed, to help pay for the Self-Employed Income Support Scheme (SEISS).
To date, the SEISS has cost the Treasury £13.4bn, with 2.7m self-employed claiming for the first income support grant, and 2.2m accessing the second.
>See also: Rishi Sunak plans grants for small businesses hit by hard lockdown
Earlier this year, Sunak was considering whether to raise national insurance contributions (NICs) paid by the self-employed by 3 per cent to pay for the SEISS.
Currently, class 4 NICs for self-employed people stand at 9 per cent a year, while those who are employed pay 12 per cent a year. Increasing this duty would add £500 to the annual tax bill for anyone self-employed earning over £42,000 a year; and £200 for the average self-employed worker.
The chancellor has since delayed his autumn statement, given the fast-moving coronavirus situation and how quickly the Treasury has to think on its feet, expanding the Job Support Scheme.
>See also: £40m funding for hospitality firms in
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MPs urge Government to do more to help self-employed through Covid-19
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
MPs have urged the Treasury to do more to help the 1m or more self-employed and others who have slipped through the cracks of coronavirus funding schemes.
Rishi Sunak is facing calls to “completely fulfil” his promise to do “whatever it takes” to support the economy after MPs concluded that many newly employed staff, self-employed workers, company directors and freelancers have been “locked out” of the Government emergency rescue package.
The Treasury select committee estimates that many hundreds of thousands of people have already endured several months of financial hardship “through no fault of their own”.
>See also: HSBC handling of bounce-back loans branded ‘shambles’ by businesses
Its report on the gaps in support for economic impact of coronavirus found that hundreds of thousands of people are missing out on support because they started new jobs after the cut-off date for qualifying.
Meanwhile, the self-employed income support scheme is not open to an estimated 225,000 people whose trading profits exceed a £50,000 cap. This includes many working in the creative industries whose earnings are just above the cap.
The SEISS also excludes hundreds of thousands of people who became self-employed too recently to have tax records, along with directors
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What the revamped furlough scheme means for your small business
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
As expected, Rishi Sunak has announced changes to the furlough scheme affecting small business.
August: small businesses will be expected to cover national insurance and pension contributions of workers on the Coranvirus Job Retention Scheme. For the average claim, this represents 5 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
September: businesses will have to cover 10 per cent of the wage costs of furloughed workers on top of NI and pension contributions. For the average claim, this represents 14 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.
October: businesses will have to cover 20 per cent of furloughed workers wage costs plus NI and pension contributions. For the average claim, this represents 23 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
Previously, it was assumed that small business owners would only be on the hook for National Insurance contributions, not pensions as well.
>See also: Small businesses will have to cover a quarter of cost of furlough
In the heavily trailed move, chancellor Sunak will allow furloughed workers
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Government looking at bringing in part-time furlough immediately
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The government is listening to retailers about being allowed to bring back furloughed staff on a part-time basis, according to one senior source.
Although independent retailers are being asked to reopen from June, the Coronavirus Job Retention Scheme will only allow part-time furlough from August.
Given a cratered economy and uncertain demand, retailers are asking why the government insists on this all-or-nothing approach.
Some shops are gingerly reopening towards the end of the working week but would have to pay staff taken off furlough fully time.
“Part-time furlough has been raised by retailers and a number of MPs. It’s something that we’re looking at and try to respond to,” said the source.
“By extending the furlough scheme in the first place, and then extending it a second time, it shows that we’re listening. We do listen and hope we’re being seen to be flexible and responsive.
“Businesses are burning though cash with no changed in fixed costs. We are never going to have had perfection implementing schemes at such speed and scale.”
Self-employed owner-directors
Meanwhile, the government is still thinking about how to open up the Self-Employed Income Support Scheme (SEISS) to self-employed owner directors.
The problem, said the source, is that
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Self-Employed Income Support Scheme now open for applications
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
HMRC has opened its Self-Employed Income Scheme for applications here.
Around 3.5m self-employed freelancers and contractors will already have been contacted by HMRC, deeming that they are eligible for the Self-Employed Income Support Scheme (SEISS).
Freelancers and the self-employed can apply for a one-off payment of up to £7,500 covering three months. This is based at looking at your tax returns for the past three years and then averaging your monthly income. Only freelancers and the self-employed who have been earning up to £50,000 a year can apply for the self-employed coronavirus income support scheme.
>See also: Self-employed Income Support Scheme what it means for you
The grant does not need to be repaid but will be subject to income tax and national insurance.
Money should hit bank accounts by May 25 or six working days after a claim is made.
However, the Treasury is already thinking about dropping the ceiling for self-employed support to £30,000 when the scheme is extended.
And the Self-Employed Income Support Scheme does not cover owner-directors of small businesses. Treasury believes it would be too difficult to calculate an average of three years’ worth of self-employed income from the tax returns of owner-directors, which include
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Ceiling for self-employed coronavirus support may be dropped to £30,000
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
The Treasury is thinking about cutting its ceiling for self-employed coronavirus support to £30,000 before its scheme has even launched yet.
HMRC has begun writing to the self-employed, telling them if they are eligible for the Self-Employed Income Support Scheme and encouraging them to apply.
The self-employed coronavirus support scheme is set to open on May 13, having been brought forward from the June start previously talked about.
Under the current scheme, freelancers and the self-employed can apply for a one-off payment of up to £7,500 covering three months. This is based at looking at your tax returns for the past three years and then averaging your monthly income. Only freelancers and the self-employed who have been earning up to £50,000 a year can apply for the self-employed coronavirus income support scheme.
>See also: Self-employed Income Support Scheme what it means for you
However, according to the Times, the Treasury is already thinking about slashing that £50,000 ceiling to £30,000 going forward.
The Treasury has already said the SEISS will be extended.
Plummeting unemployment
However, HMRC officials are trying to figure out ways to wean workers off government support packages such as the SEISS and its furlough scheme without creating plummeting unemployment.
Chancellor
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HMRC opens self-employed income support early on May 13
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
HMRC will open the Self-Employed Income Support Scheme (SEISS) earlier than expected on May 13.
The taxman has already begun notifying the self-employed if they are eligible for the SEISS.
Previously chancellor Rishi Sunak had announced the scheme would open in June.
The claim service will open on May 13 and payments to eligible workers will be made by May 25, or within six working days of completing an application.
Approved claims through the self-employed income support will be made within six working days.
The Self-Employed Income Support Scheme will allow you to claim a taxable grant of 80 per cent of your average monthly trading profits, paid out in a single instalment covering three months, and capped at £7,500 altogether.
>See also: Self-employed Income Support Scheme what it means for you
HMRC says this temporary scheme may be extended.
The grant will be subject to Income Tax and self-employed National Insurance.
You can check if you’re eligible to claim through the HMRC website here.
Self-Employed Income Support
While the accelerated scheme will be welcomed by the 3.8m self-employed workers thought to be eligible, the government’s decision to press ahead with the Self-Employed Income Support Scheme disappoint up to 2m people who it has