A tax update in taxing times
DESPITE the postponement of the IR35 regulations on tax, we are hearing cases of freelances being told to invoice as limited companies, with all the hassle that would entail.
One freelance who contacted us had already submitted an invoice, only to be told they would have to register as a limited company to be paid. We understand they have taken the matter to the Freelance Office.
Changes to the Inland Revenue rule called IR35, that were due to have come into force on 6 April, have been postponed until 6 April 2021. The effect of IR35 is that people who sell their services through a limited company have to join the Pay As You Earn (PAYE) tax scheme if - and we approximate here - they otherwise look like an employee. The planned change will make more companies liable in the event that they mis-set the tax status of those they engage.
Some corporate clients, in a state of confusion over IR35, seem to have just laid off their casuals in response.
Income tax postponed...
The deadlines for self-assessment payments on account due to HMRC have been postponed because of covid-19. Those of us who had payments on account due on 31 July now have until 31 January 2020.
HMRC is now running a covid-19 hotline with advice for those experiencing difficulty paying their taxes, on 0030 456 3565, and is holding frequent webinars on how to apply for the Self-Employed Income Support Scheme (SEISS). Details are at www.bit.ly/SEISS-webinar.
NUJ Freelance Industrial Council's Adam Christie reminds us that "our colleagues in PCS (civil servants' union) working for HMRC have been working really hard and deserve commendation" for their efforts to ensure SEISS runs smoothly.
...but now would be a good time to deal with tax
If you have suddenly found yourself with a lot more time on your hands, now's the time to sort out your self-assessment tax return for the tax year April 2019 to April 2020, which closed on 5 April. Doing your taxes now will ensure you have plenty of time around the 31 January 2021 deadline to submit tax returns - hoping that things will be busier for us by then. This way, you will avoid the usual last minute all-nighters of filling in your tax return over the New Year.
At www.londonfreelance.org/fl/2006help.hmtl#UC we report on changes to the ways that savings in the bank affect your eligibility for Universal Credit - providing you declare them to be set aside for "business purposes", such as anticipated tax bills.