DWP have released their FRS for the 2019 to 2020 financial year, the period in which coronavirus emerged to wreak havoc on the economy. The report released by the Government summarized the key findings from surveys conducted with 19,000 UK households.
In examining the findings, Hargreaves Lansdown highlighted that one in 10 had no savings when the pandemic hit, with half having £1,500 or less for funding.
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, commented on the data: “These figures show just how exposed we were when the pandemic hit: one in 10 people had no savings at all to fall back on, and half had £1,500 or less.
“This is far less than we need in our emergency savings accounts.
“Now, a year into the pandemic, there are an awful lot of people who have seen their threadbare savings eroded even further: one in three people have had to eat into their savings.
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“However, one in four have had a chance to rebuild their cash balances. If your income has been resilient so far, it’s well worth taking stock, making sure you have three to six months’ worth of essential expenses in a competitive easy access account, and that you consider tying up any additional savings for the periods that suit your circumstances best, in order to lock in a better rate.”
The same survey also showed self-employed workers earned on average 15 percent less than employees, with fewer than one in five paying into a pension.
The Government detailed this 15 percent is the smallest difference seen over the last 10 years and among those in full time work, the earnings of the self-employed have grown at a faster rate than employees in recent years.
Despite this, self-employment income is still being hindered by National Insurance rates and tax costs.
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On taxes, workers have been urged to remember an upcoming self-assessment deadline, with these assessments typically impacting self-employed workers.
Recently, HMRC announced it would delay imposing penalties for the late payment of self-assessment tax by one month to April 1 to help those whose finances have been affected by the pandemic.
Additionally, late payments for outstanding tax bills which are charged six and 12 months after the deadline have also been pushed back to August 2021 and February 2022 respectively.
However, people with an outstanding tax bill have been incurring interest of 2.6 percent since the January 31 self-assessment deadline expired according to analysis from UHY Hacker Young.
In light of this, UHY Hacker Young urged those who aren’t in a position to pay their bills now should speak to HMRC about a time to pay arrangement urgently.
Doing so would allow them to spread the payment over a longer timeframe and avoid a late payment fine.
Where taxpayers are issued with a late payment penalty, UHY Hacker Young noted appeals should be sought where people feel they’re incorrect, as HMRC often issues fines in error.
Last year, HMRC initially imposed £275million in penalties for late payments of self-assessment tax and over 60 percent of this was later cancelled following appeals.
Graham Boar, a partner at UHY Hacker Young, commented on these realities: “Taxpayers are running out of time to pay their tax bill before they are hit with a late payment penalty. Because of Covid, HMRC offered a grace period but that is running out.”
“The past success rate of appealing late payment penalties suggests that taxpayers shouldn’t panic if they are incorrectly charged with a penalty.
“HMRC has proven that it will hold its hands up if it’s made a mistake.
“HMRC is actively encouraging taxpayers to make use of time to pay arrangements, this could be a lifeline for individuals who know they will struggle to pay their tax bill on time. If they choose to ignore it, they’ll only see the money owed increase even further.”
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