We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
Self-employed people can now apply to spread sums due in January into more affordable partial payments under the government’s Time to Pay initiative. Previously, the threshold for such payments was set at £10,000, but this has been increased to £30,000 to provide more support to those who file self-assessment tax returns. However, those who choose to spread their payments will be charged interest on any outstanding tax from February onwards.
The 2.6 percent interest bill has been described as a “kick in the teeth” for self-employed people going forward.
Rules previously in place for taxpayers allowed July tax bills to be deferred to the end of the year without a fear of penalty.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, commented on the situation for self-employed people amid the pandemic.
She said: “Self-employed workers have got used to bad news during the crisis, when every government announcement about support has come with caveats that exclude millions.
“So it’s yet another blow to discover that when the Chancellor announced they could spread their self-assessment payments over 12 months, he didn’t make it clear that they’d pay for the privilege.
“For those who take advantage of the initiative, it will still make an enormous difference to their ability to keep on top of their tax debts.
“At this stage, they need all the support they can get – but it adds insult to injury for those who have been struggling with a system that has seemed stacked against them from the start.”
Many self-employed people have found it difficult to navigate the ongoing financial crisis.
Inheritance Tax UK: The best ways to plan for your family’s future [ANALYSIS]
Furlough fraud warning as claims reach final month – key deadline [INSIGHT]
NS&I customers warned of ‘technical issue’ when withdrawing money [UPDATE]
The Chancellor Rishi Sunak came under fire for the gaps in government measures, which campaign groups said left many unsupported.
The organisation ForgottenPAYE said in July that approximately six million people had been left out of government support measures.
Of these, the group stated, 2.47 million self-employed taxpayers were identified as having been excluded from the Self-Employment Income Support Scheme (SEISS).
Reasons were varied, but affected those who started working for themselves after April 2019.
The rules also stated at least half of a person’s total income had to come from self-employment, and was also required to be under £50,000 – but this also caused issues for freelancers and zero-hours workers.
However, Mr Sunak stated there was “no way” he could ensure all 50 million adults in the UK were unaffected by the crisis.
He instead pointed towards other financial support put forward amid the crisis, including council tax grants, loans and mortgage holidays.
For those who do wish to set up their own Time to Pay arrangements, certain criteria must be met.
These individuals need to have no outstanding tax returns, other tax debts, or additional HMRC payment plans established.
The debt must also sit between £32 and £30,000, with the payment plans set up no later than 60 days after a debt’s due date.
It is estimated by HMRC that approximately 95 percent of taxpayers who use self-assessment due to make a payment on January 31, 2021 could qualify for a Time to Pay arrangement.
HMRC must still be contacted in the standard way for those who need longer than 12 months to settle up their tax debts.
Source: Read Full Article