The freelance tax deadline of January 31st is just 10 days away, and millions of freelancers face late tax return penalties, as HMRC ignores calls for a reprieve on the fine. About 2.5m people are likely to be fined a minimum of £100, according to research by the Association of Chartered Certified Accountants UK.

News that freelancers may be hit with a hefty tax penalty is another blow to an already struggling freelance market. The pandemic has seen freelance wages fall by 30% since the pandemic, and many freelancers did not qualify for government support. Over 250,000 self-employed workers have returned to the stability that full-time work offers.

Justin Small, founder and CEO of Future Strategy Club comments on the importance of the freelance sector and provides his tips for freelancers:

“Freelancers are a vital part of our economy, with more than five million self-employed people in the UK, representing 15.3% of employment. Freelance talent is particularly important at the moment, as short-term, outside talent can bring a fresh perspective to businesses who are struggling, and integrate a new, more flexible ethos to firms who are looking for the best way to accommodate new business models and legislations. In a time of economic turmoil and uncertainty, funds and resources may be low, utilising freelance talent also allows firms looking for specific talent to find it quickly and without breaking the bank.

Despite being a key part of the economy, freelancers often get overlooked by the government. This year has been particularly tough for freelancers, with many not eligible for financial support, and now facing complications due to tax penalties.

1. Ensure your tax return is filled out on time

Although this may seem like common sense, it’s crucial to ensure freelancers complete their tax return on time to avoid fines or penalties. However, if your income has been hit substantially by the pandemic, there are options to reduce upfront costs.

2. Reduce your payment on account

As HMRC calculates your tax bill based on the previous year, freelancers who lost income due to the pandemic may be overpaying. Individuals can apply to have the amount they pay on account reduced via the HMRC website. Freelancers can also defer their tax payment due on 31 January 2021 by up to 12 months.

3. Utilise the “Time to Pay” payment plan

Many freelancers have been negatively impacted through the pandemic, and paying their tax bill upfront may not be possible. HMRC is allowing freelancers to spread the cost for their 2019-20 taxes. Individuals can set up a payment plan after completing their return and calculating how much they owe. This can even be done online if less than £30,000 is owed. Individuals will have to pay interest on this, but it may help freelancers who can’t afford to pay upfront.

4. Boost your career through learning and development

In a difficult year for the self-employed, freelancers may find that their personal development has taken a back seat. As a freelancer, learning and development is often non-existent, or can feel like you’re going in circles. Continuous learning is crucial to stay on top, and there are now programmes to help. FSC Grow gives freelancers a dedicated L&D professional to help identify your goals and build a 6 month personal development plan. It also provides a blended learning programme that considers working life holistically, not just in the workplace, all for the monthly cost of a gym.”