Freelancers could be worse off

PAYG tax plans would leave freelancers worse offA survey by freelancer trade body IPSE shows that two in five freelancers would be left out of pocket by tax plans that would see the self-employed paying regular monthly tax bills as if they were employees. A proposed monthly or quarterly pay-as-you-go tax regime would require the self-employed to pay tax in advance, based on their profits from the previous year. Three quarters of respondents said they set aside cash specifically for taxes, but a fifth would have to use money meant for business expenses, while almost one in five would have to use money invested in their business to cover the cost. A tenth said they would have to use money meant for household bills, while 7% would be unable to afford more regular payments. IPSE's Andrew Chamberlain said more frequent payments would mean “freelancers have to face not just one tax deadline, but four or even 12”. He added: "Many fear the inevitable bumps in the road of freelancing would mean they would miss one and find themselves hit with late payment fines and interest.”