Self-employed Sole Traders - where do you start in the new tax year?
Tax planning Guide for Self-employed Sole Traders.
To help you with your tax planning, we’ve asked GoSimpleTax to produce this article.
The new tax year started on the 6th April – that we do know for sure.
At times it felt like everything else changed and at a very quick pace. Our world slowed down – working from home where possible, home schooling our children the #StayHomeSaveLives were on windows with rainbows.
People settled into ways of working from home with daily routines including video calls to keep connected with fellow employees, following pop quizzes on the radio or simply taking time to reflect. Kids following PE lessons, craft tutorials and Disney princesses via online platforms while parents worked.
As this way of life continues for the foreseeable how can you be more productive?
One main cause for concern is money, knowing your financial stance helps you plan for the future. By getting ready to calculate your 2019-20 tax return –you will have your income and tax liability ready.
Digital copies of receipts and paperwork can be saved allowing for a clear out of the home office.
Whilst you do not have to submit right now, being safe in the knowledge of your outgoings for tax means you can then focus on sales and plan for the future.
The government stepped up and offered financial support
As the pandemic picked up pace and businesses were restricted by the Government the self-employed sat waiting and hoping they would be thrown a life-line. Chancellor Rishi Sunak gave them the Self-Employment Income Support Scheme.
The scheme is open to self-employed individuals or a member of a partnership who:
- Have submitted their Income Tax Self-Assessment tax return for the tax year 2018-19.
- Traded in the year 2019-20
- Are trading when they apply, or would be except for COVID-19
- They intend to continue to trade in the tax year 2020-21
- They have lost trading/partnership trading profits due to COVID-19
For a further in-depth review of the scheme please follow the link above or visit www.gov.uk
Please note you had until 23rd April 2020 to file your 2018-19 self-assessment tax return to be eligible for this scheme.
A further helping hand was offered for anyone who uses Payments on Account, they will have their normal payment due on 31st July deferred - this payment won’t be due until 31st January 2021.
Another deferral was that of the VAT payments due before 30th June 2020, these will now not need to be made until 31st March 2021. However you will be required to file your VAT return.
There were earlier announcements made by the Chancellor in March 2020 with an emergency £330bn financial package to bolster the UK economy. These included a business rates holiday and for struggling firms, loans.
There were postponements too for the controversial tax reforms to off-payroll working rules, more commonly known as IR35 – these have been postponed until April 2021 to help ease some strain from the pandemic and the effect it is having on businesses and individuals.
In 2019, it was announced that the Personal Allowance would be increasing from £11,850 to £12,500. Thanks to the increase, the tax brackets in the UK were also to be pushed back. Specifically, the basic rate limit was increased to £37,500 and the higher rate threshold was set at £50,000.
In April 2020 the Capital Gains Tax allowance increased to £12,300. Anything above the allowance, though, will be taxed at 18% for basic-rate taxpayers and 28% for additional-rate taxpayers. The Capital Gains Tax Allowance is the amount you can make form the increased value of your possessions tax-free.