For Immediate Release
The Tax Advice Network
Whilst talk of income tax cuts may seem a welcome solution to the current economic crisis, they would do nothing to help the immediate plight of the 3.8 million self employed workers, who won’t see any benefit until January 2010, according to experts at The Tax Advice Network.
Mark Lee, former ICAEW Tax Faculty Chairman and Chairman of The Tax Advice Network reveals that as self-employed workers will not be submitting their current accounts until after March 2009, any income tax cuts will only affect the income tax payable in January 2010. And any cuts that take effect from April 2009 will affect income on which the tax is not due for payment until January 2011. This is in stark contrast to employees who benefit from tax cuts in their wages and salaries throughout the year.
“Self-employed really people are getting forgotten in all this talk about tax cuts as no one is suggesting anything that will provide any immediate benefits for them.”, says Lee.
Conservative leader David Cameron has proposed tax cuts worth £2,500 per person, per year, to be given to employers who hire new workers who have been unemployed for three months or more, but Lee argues that even this would provide no relief for sole traders who have no need for employees.
Lee also believes that the proposed deferment of VAT payments by six months for small businesses is likely to cause more harm than good as a delay in payment means that the VAT money is more likely to be spent elsewhere, especially during times when cashflow is tight. “When it falls due the taxman will have no sympathy with traders who have failed to generate the money required to settle their VAT liabilities”, says Lee.
“The only way that self-employed people will see an immediate impact is through changes in the tax credits system, however this relies on people qualifying, registering and actually claiming tax credits in the first place”, adds Lee. “Sadly the system is not fit for purpose and claims can only be backdated by 3 months so many people lose out as they did not anticipate their income falling to a level that would qualify for tax credits.”
The Tax Advice Network is UK’s first independent specialist tax advice network. For more information visit www.TaxAdviceNetwork.co.uk
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