Will the Pandemic Impact Your Personal Finances?
Over a year on from the start of the Covid19 pandemic, a clearer picture is starting to form about the impact that the pandemic has had on numerous aspects of our lives, including our personal finances. As a result of changing working patterns, job changes and furlough, many people may find that their taxation situation has also changed over this past fifteen months. David Redfern, tax preparation specialist and director of DSR Tax Refunds Ltd, gives the lowdown on how Covid could have affected your taxes.
In March 2020, when the UK government announced the first national lockdown, the working lives of the majority of taxpayers were turned upside down. Redfern stated, “With the introduction of furlough and widespread working from home practices, the landscape of work in this country has changed beyond recognition for many, all of which has had a knock-on effect on so many other aspects of our lives – from how we spend time with our families to our personal finances. As an example, the introduction of furlough has meant some workers receiving lower wages than prior to the pandemic which could potentially affect the tax threshold range that applies to them”. With the personal allowance at which taxpayers are required to pay tax set at £12,570, workers who were only just over the threshold may now find themselves below the income level at which they need to pay tax. Similarly, taxpayers who were previously taxed at the higher rate tax band may no longer be meet the income threshold of £50,271. Those who have been paying tax at the incorrect rate may be entitled to a tax refund.
In order to safeguard an income for workers who have seen their jobs or businesses adversely affected by the need for business closures, the UK government introduced a number of income replacement schemes. Eligible employees impacted by business closures have been able to receive furlough payments, while self-employed workers have been able to claim grants under the SEISS (Self Employment Income Support Scheme). Redfern explained, “Both furlough and SEISS are intended to replace lost income that the worker would have otherwise earned if their business had not been severely impacted by the pandemic, and as a result they are treated just like earned income and are subject to income tax and National Insurance in the same way. Furloughed workers will have their tax and National Insurance deducted via payroll just as they would under normal circumstances, whilst those in receipt of SEISS grants will be expected to account for them under Self Assessment just as they would earned income”. Both furlough and SEISS grants are intended to replace lost income and as a result, are not expected to be repayable, unlike the Recovery Loan scheme introduced to help business recover from the financial effect of the pandemic.
For many workers, Covid19 has meant working from home. Whilst countless workers have appreciated an end to the daily commute, working from home has also brought additional household costs. Redfern stated, “As a result of the widescale change to working from home, numerous workers will have found that their household costs have increased as a result of the increased time spent at home – energy bills will have gone up to account for the extra electricity and heating used, especially during the winter months, and those whose water supply is metered will also have seen an increase in their bills”. HMRC allows these additional expenses to be reclaimed as tax relief, where the employee has not already been reimbursed by their employer. Not all household expenses can be claimed as tax relief – housing expenses, such as rent, mortgage payments or council tax, as well as broadband charges are not considered eligible for tax relief as they are considered to be static costs.
Workers who have found that their taxes have been impacted by the Covid19 pandemic are encouraged to check out the wealth of resources on the DSR Tax Refunds Ltd website. The website also includes a handy tax refund calculator to help individuals work out how much tax relief they might be eligible to claim.
About DSR Tax Refunds Ltd
DSR Tax Refunds Ltd is a firm of tax preparation experts who specialise in CIS tax returns for construction workers working within the Construction Industry Scheme (CIS) as well as employees who are eligible to claim a tax refund for their work-related expenses, including employees working from home as a result of the Covid19 pandemic. Their friendly and helpful team can help with all relevant paperwork to ensure clients claims are handled in an accurate and efficient manner.
For more about DSR Tax Refunds Ltd, visit https://tax-refunds.co.uk/
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DSR Tax Refunds Ltd
Registered Office: Ground Floor, Seven Mile House, 1 Mansfield Road, Papplewick, Nottingham, NG15 8FJ