2.9 million self-employed individuals are facing the prospect of a cash flow crisis in the coming months as the Self Assessment deadline looms, according to accounting experts.
Almost three million self-employed individuals whose businesses were affected by coronavirus may have to return all, or part, of their Self-Employment Income Support Scheme (SEISS) grants, despite continuing volatile trading conditions.
Some self-employed individuals who claimed support from the grant during coronavirus may not have been impacted by the pandemic as heavily as they first thought. However new challenges, including rising energy bills, interest rates, and cuts to universal credit, could see them face further difficulties. Along with the additional prospect of having to pay back part of a previous grant, it could lead to serious solvency problems.
A total of £25.2 billion in financial support was accessed by contractors, freelancers, and other self-employed people across five SEISS grants, in the last 18 months. Used to stabilise their businesses HMRC recently issued new guidance warning that some, or all, of the funds may need to be paid back if they suffered less than anticipated – or individuals might face a penalty.
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Accountancy experts at The Accountancy Partnership are encouraging self-employed business owners to complete their Self Assessment tax returns well before the 31 January deadline, to give them more time to understand their financial position.
Lee Murphy, Managing Director at The Accountancy Partnership, said: “The time leading up to the tax return deadline is always a busy period for everyone, and against the current difficult business conditions it can feel almost impossible to get on top of financial affairs while securing the future of a business. Despite these challenges, it’s crucial to make sure financial affairs are in order to avoid overpaying tax, or being asked to return grants you have previously received. Those who do need to repay part of their SEISS grant will have received a letter from HMRC, so it’s important that this paperwork isn’t ignored or put to the back of the priority list.
“The effects of the pandemic, coupled with Brexit, gas prices, and supply chain issues mean that businesses really cannot afford to face a cash flow problem as there are no future plans for government financial support. Completing accounts and submitting them in good time gives business owners one less thing to worry about in the run-up to Christmas and at the start of the new year.”
Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.
