With many workers struggling financially due to the pandemic, new research has revealed that a third of contractors are worried they won’t be able to afford their tax bill.
The IPSE survey shows that seven per cent admit that they won’t be able to pay it at all, while 12% said they will have to borrow the money to pay it, either by asking friends and family (4%), taking out a loan (3%) or using their credit card/overdraft (5%).
This year, because of the consequences of Covid-19, the government has put additional measures in place to help contractors pay their tax bill – they will not be issuing late filing penalties up until the 28th February (although interest will still be charged) and taxpayers are able to apply online for ‘Time To Pay’ to spread their bill over up to 12 months.
However, the IPSE results showed that as many as 48% of self-employed workers had no idea about these new measures.
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Email JaimeAndy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed), commented, “It is clear from these results that this year’s tax bill will be an enormous strain for many of the self-employed – especially since such a large proportion of them have been excluded from support during the pandemic.
“Government has taken positive steps to mitigate this strain, but it is evident that far too many of the self-employed do not know there is help available. In the short-term, we urge the government to do more to publicise schemes such as Time To Pay to reduce the hit to this struggling sector. We also urge government to make it clear that being late to pay tax could still incur extra interest payments for freelancers, even if no penalty will be charged for late filing.
“In the long-term, we believe government must also look again at support for the 1.5 million excluded self-employed. The gaps in support are a key part of why so many freelancers are struggling with their tax bill now. Ahead of the fourth round of SEISS grants, government should look again at the application criteria and the many policy proposals put forward to now include the newly self-employed, limited company directors and the other excluded groups.”
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