Every year, the government delivers their 'budget'. Just like a budget for your family or your business, this is simply the Chancellors opportunity to tell us all how he will spend our taxes.
Or rather, as is the case today, how he'll be spending a lot of money, some of which will come from taxes, and quite a bit of which he'll be borrowing.
The main focus of his additional spending is supporting the country through the impact of the Coronavirus (at least £12billion this year). There are lots of great summaries out there of what was in the budget, but we wanted to focus on the way it might impact our customers: the self-employed!
- The government has promised special support if you're self-employed and need to take sick leave or have to self-isolate during the Coronavirus outbreak. As the self-employed aren't entitled to statutory sick pay (like many employees are), if you are sick, your best bet is to claim Universal Credit. For the duration of the Coronavirus outbreak, you will now be able to claim Universal Credit from day one (rather than day eight, as it usually is), and the minimum income (i.e the amount you need to have earned in a prior period in order to claim) will be reduced.
- The government has promised special support for the self-employed to navigate the tax system. This will come out in the summer, in the form of new interactive online guidance for any taxpayers who have income outside of normal PAYE.
- They've also announced that they'll be giving special & specific consideration to how to support self-employed parents so that they can continue to run their businesses when they have children. This will form part of a wider review of Parental Pay & Leave.
- They're going to give people extra time to pay their taxes if a business (or self-employed person) is struggling because of Coronavirus. If the outbreak causes financial distress to your business, the government is going to give you extra time to pay your taxes. They've set up a special helpline to handle this. It'll be considered on a case by case basis, but they clearly want to help.
These aren't specific to the self-employed, but some other key takeaways from the budget that might well be relevant to Penfold customers:
- National Insurance thresholds have increased - From £8,434 to £9,500. So you won't pay National Insurance on any earnings below £9,500 a year. A tax break, essentially!
- The amount you can pay into your pension over the course of your life has increased from £1,055,000, to £1,073,100!
- The tapered annual allowance threshold has increased (This applies only if you earn over £150k 💰!). This is fairly complicated, but it basically means that the amount you have to earn before the government reduces the amount that you can pay into your pension (£40k a year), has increased. From £150k - to £240k.
This is just a quick summary of what we think are the most relevant parts of the budget for the self-employed. We will update this as more detail is released. Feel free to get in touch with the Penfold team if you have any questions!