Just four in 10 sole traders have returned to pre-pandemic levels of trading despite Covid-19 restrictions being lifted, a major study has revealed.
The report comes after the Government revealed that the smallest of businesses could pay more tax next year.
The research, published by business lender iwoca, shows that sole traders have been “disproportionately impacted” by the coronavirus pandemic and are “twice as likely” to not be trading compared to limited companies.
In total, some 60 per cent of sole traders say they have not returned to pre-pandemic levels of trading or are not trading at all. Many of these businesses say customers have not returned or Covid-secure workplace measures are preventing them from working at full capacity.
One in two sole traders, meanwhile, are concerned that they won’t be able to pay themselves a salary in the next six months, while one in three (28 per cent) worry about being able to afford new stock.
A further one in five (20 per cent) are concerned that they will struggle to repay coronavirus loans, such as a Coronavirus Business Interruption Loan or Bounce Back Loan.
Commenting on the findings, Seema Desai, iwoca COO, said: “The pandemic has hit sole traders particularly hard.
“We need them back on their feet – hopefully the lifting of restrictions will help them to recover, which will be great for them and also for the economy more broadly.”
The survey comes after the Government proposed changing the way sole traders and small businesses pay tax.
According to HM Treasury, the Basis Period reforms – set to come into effect by 2023 – will prevent businesses from paying tax twice when their financial year does not align with the tax year.
But critics have warned that sole traders will have to pay tax earlier than planned – potentially impacting cash flow and investment plans.
For help and advice with related matters, please get in touch with our team today.