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Struggling freelancers face overpaying tax

07-01-2021

HMRC's automated system could mean nearly a million freelancers face overpaying tax this year by not taking advantage of the Covid reprieve. HMRC's “payment on account” system calculates advanced tax payments based on tax bills from the previous year and does not take earnings lost during the pandemic into account. The first of these advanced payments is due on January 31. The tax authority will allow self-assessment taxpayers to reduce their payment on account bills if their earnings have dropped but more than a third of freelancers are unaware this facility exists, according to accountants TaxScouts. Andrew Chamberlain of the freelancer trade body IPSE commented: “Right now, because of the pandemic and the gaps in support, the freelance sector is under more financial strain than at any time in recent history. The last thing it needs is mistaken tax bills adding to that.”

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