The self-employed have been hardest hit during pandemic
ARE you self-employed? If so, you have been hardest hit by the three lockdowns of the last year.
As self-employed people, how could we see our customers, when we couldn't see our own relatives?
But the government doesn't see it that way, and they don't have much sympathy.
The Chancellor of the Exchequer has spent between £300bn and £500bn helping employed workers on furlough and the other emergency schemes that had to be put in place, but now he has to look around and find where he can get it back.
Give the man a break; it's his job.
The Treasury say he is reportedly “minded” to axe the National Insurance band for the self-employed, bringing everyone into line with employed workers.
“Minded” usually means it's likely to happen.
At present, if you are self-employed, you pay class four National Insurance, which takes 9 per cent of your profits between £9,501 and £50,000, as opposed to 12 per cent for employed staff.
The Chancellor could implement this in his Autumn Statement, which is an update on the Government's economic plans. As you can imagine, his plans could be a bit more extreme this year.
In the past year, there were three million self-employed who received no Covid support from the Government, because they did not qualify for the Self-Employed Income Support Scheme, or operated their businesses through limited companies.
If you are operating your business through a limited company, the Government is gunning for you. They have been trying to find ways to place additional tax on you for years, and this year, the pressure on them is heavier than ever.
One expert said that the scale of the impact during this last year felt by the self-employed is abundantly clear.
“While the Government support packages have proven a lifeline to many small businesses though the pandemic, 81 per cent of people believe feel it hasn't been enough, with over two million small or medium sized enterprises unable to access any support.”
In terms of benefits, our friends at Royal London tell us that the self-employed missed out on nearly £10,000 of benefits given to employed workers.
The Institute for Fiscal Studies (IFS) tells us that according to their most recent research, only a sixth (16 per cent) of self-employed workers are looking after their retirement by saving into a personal pension.
There is no doubt that pension planning for the self-employed is not easy. There is no structure, as you would have if you worked in a company. You have to do it all yourself.
When the introduction of auto-enrolment meant that your full-time friends who work in companies were placed into a workplace pension, with their employer also paying into it, you were not included.
The freedom of being self-employed comes at a price.
There will come a day when you are too tired to make that phone call, or climb that ladder. Or both. Hopefully not at the same time.
If you would like to plan ahead for that now, then setting up a personal pension could be a good plan. Give us a ring.
:: Michael Kennedy is an independent financial adviser and pensions specialist and can be contacted on 028 71886005. Further information on Facebook at Kennedy Independent Financial Advice Ltd or at www.mkennedyfinancial.com