Despite many added perks for freelancers in the UK, the tax challenges can be overwhelming. And that is because freelancers often have to figure out complicated tax guidelines on their own. However, the flexibility to work on preferred interesting projects is perfect.

For freelancers, every penny is valuable to support themselves. Freelancers, for example, have to take care of finances and pay lower taxes without penalties. Keeping that in mind, here are some of the most straightforward methods freelancers can use to be more tax-efficient.

What’s in the Bag for Freelancers?

Initially, the government only rolled out benefits for businesses and their employees. However, freelancers can rejoice in the fact that they can apply for more than £2,500 a month grant as per the new scheme.

Don’t Wait for the Deadlines

Take advantage of the delay in filing your annual tax bill. Use this time to resolve any issues that might complicate your taxes. You can, for instance, divide your tax process within the postponed period to decrease stress later on. Consequently, you will be able to save valuable time and avoid the £100 penalty on an interest payment.

Get Paid as Soon as Possible

The management of your invoices is crucial for freelancers. Companies, after all, are struggling to stay competitive amidst COVID19 impact. Therefore, your focus of attention should be to reprioritize some goals and make sure you have sufficient cash in your bank account to survive in hard times. Also, freelancers can recover debt and interest related costs if a company fails to pay you back because of the pandemic.

Take a Look at Your Savings

Freelancers, however, shouldn’t take the measures set forth by the government for granted. Nonetheless, you can make the most out of this time by thoroughly preparing for uncertain tax issues. So, review your current investments and savings, and then determine how much amount you will need in the foreseeable future if your freelance work started to decrease. Ideally, your savings should be able to cover at least three months from now.

Don’t Forget to Claim Benefits

Yes, freelancers can also claim sick pay throughout the pandemic’s precautionary self-isolation period. Furthermore, you can claim employment & support allowance (ESA) from the first day rather than the eighth day. That said, how much you receive ultimately depends on elements like your application stage and age. As of now, you can get the maximum payout, which is £111.65per week.

Wrap Up: Don’t Stress ‘Too Much’ about Taxes

Freelancers should take a sigh of relief because of the delay of tax payments for the next six months. The current containment of the COVID19 pandemic is still running its course. Currently, freelancers don’t have to pay their annual tax bill until Jan. 2021.

Apart from a special helpline set up by HMRC for self-employed individuals, you can learn more information about updated due dates for taxes. The current uncertain times doesn’t mean you should ease your freelance responsibilities. Instead, engage online with as many individuals as you can.

It is a perfect time for you to learn about new industry trends. In fact, get support from your family and friends. Maintain the same amount of freelance responsibilities as you did before the pandemic without compromising your quality of work and level of professionalism.

We can help with all of your business and personal tax and financial planning needs. For a strategic review of your finances, please contact us.

Disclaimer: We don’t take any responsibility for actions taken based on above information. Please speak to our consultants if you need more information. This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.

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