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Covid-19 Self-assessment Self-employment
With the outbreak of one of the most contagious diseases in the world now rapidly spreading across the UK, thoughts turn towards limitations to the ability to work and lack in personal funds.
And as Prime Minister Boris Johnson encourages the public to self-isolate and restrict human contact in the upcoming weeks, some find themselves wondering how their income is going to be affected – particularly those working in customer facing roles who pay mortgages, rent, council tax and have to take care of their families too.
Here we will look at what steps you can take to prevent facing financial issues if you find yourself in quarantine or self-isolation.
With our Prime Minister strongly recommending us to work from home, additional costs for charging laptops, phones, heating and lighting our homes will begin to add up.
So what tax relief measures are in place for those who will see a spike in their bills due to working from home?
When employees work from home, they are eligible to claim back a proportion of their additional costs generated through charging computers, electric, lighting and more.
Those working from home, who can currently claim £4 a week off their income tax bill, will see a rise of what can be claimed, to £6, from April.
Reimbursements can cover additional costs generated by any home-working employee.
Costs including heating and lighting costs, additional insurance, telephone and internet bills as well as business rates, if applicable, can all be reimbursed.
Your employer can pay you up to £4 a week (£18 a month) to cover your additional costs if you have to work from home and you will not need to keep any records.
The costs that are exempt to reimbursement are mortgage interest or rent, council tax and water rates, as they would be the same whether you worked from home or not.
Another question prompted by many is what are we all going to do when stuck in isolation for the coming weeks? Some may learn a new creative skill, try home workouts in an effort to stay fit whereas others will take this time to simply just relax and catch up on their favourite TV shows.
But for the bookworms, taxes are to be cut on VAT of digital books, newspapers and magazines later this year.
As the UK announces its £350 billion business loan guarantee and worker support package, some were disappointed to see that no direct VAT measures were detailed in the scheme.
For business owners that are experiencing financial difficulties because of the COVID-19 outbreak, a helpline has opened to take requests for VAT payment delays and discuss repayment schemes for the future.
And for consumers, a large cut in VAT will be one of the first policy tools the government uses in a recession. By cutting the cost of a wide range of goods and services, it works as a boost to the spending power of consumers.
However, reducing the rate of VAT is expensive and for those who have lost their jobs, it will not be as effective as there is no income to spend.
Last week it was announced one of the changes in the Budget 2020 plan is that the National Insurance threshold will increase to £9,500 from £8,632.
This increase means 500,000 people won’t have to pay this tax says the Institute of Fiscal Studies (IFS), while those who still pay will find themselves around £85 a year better off.
Workers who earn more than £12,600 a year will save around £100 a year the Treasury estimates.
Self-employed workers will find that they save around £78 on their annual tax bill, a significant difference to those on lower incomes.
The change comes into action from April 2020 and is the start of the support for minimum wage earners to help with money problems during the coronavirus pandemic.
If you need help with payments for rent, council tax, living costs and more, it is worth signing up for Universal Credit.
Check whether you could apply for a discretionary housing payment (DHP) from your local council.
You cannot get a DHP to help with council tax, although some councils run similar funds alongside their local council tax support schemes.
If you need help with paying council tax, it is recommended to contact your local authority. Visit your local authority website for more information on how to claim. Support will be means tested and paid in the form of a rebate.
Under the Construction Industry Scheme (CIS), contractors are to deduct 20% of subcontractor’s payments and pass it on to HMRC. Subcontractors are required to make a return of their profits each year, and their tax liability is based on that return.
Subcontractors will find typically that they have already had these deductions made, as shown on the payment and deduction statements given to them by their contractors.
These deductions count as advance payments towards the subcontractor’s tax and NI bill.
But with the COVID-19 outbreak, subcontractors may not be able to work or have limited work to do.
If you find yourself in this situation and have paid more tax than expected, visit the Claim Back Tax website to find out how much you’re entitled to claim back and to register for your CIS tax refund.
If you need to self-isolate under concerns you could fall victim to coronavirus, the government have now made it easier for people to claim sick pay and receive benefits.
Statutory Sick Pay (SSP) is £94.25 a week, and to be eligible you must earn on average at least £118 per week.
However, the level of benefits that are available will be far below what many people will need to cover household and living costs.
Equating to £377 a month, SSP falls short of more than £150 of the average cheapest rent in the North East in 2019.
For those who are struggling to make ends meet amid the pandemic, lenders are looking to help with measures in place to either reduce or delay mortgage payment and lengthening the term of monthly payments to reduce the monthly cost.
In a government announcement (Tuesday 17 March), the Treasury has agreed with the body representing mortgage lenders, UK Finance, that lenders will support customers who are experiencing issues with their finances as a result of COVID-19 and the options include a payment holiday of up to three months.
However, with this will come an influx in people taking out loans to help fund outgoings, with the government needing time to recover after this spike.
We know this is a lot to take in and it is an unprecedented time for everyone, but the more we can all work together and help each other out during this difficult time, we will get through it. If you would like any further information or help, you can keep up to date with our social media feeds.