Martin Lewis, widely recognized as the Money Saving Expert, has recently issued pivotal warnings aimed at self-employed individuals and workers on the national living wage, urging them to be vigilant about forthcoming financial deadlines and their rights against wage underpayment.
With just under two weeks remaining until the looming deadline for self-assessment tax returns, Lewis's team is emphasizing the urgency for those self-employed to act swiftly. According to Money Saving Expert (MSE), "You have until 11.59pm on Friday 31 January 2025 to send HMRC an online tax return for the 2023/2024 tax year, which ended on 5 April 2024." The potential penalties for delaying this process can be severe, starting with fixed penalties of at least £100, alongside accruing interest on any overdue tax payments.
Currently, there are approximately 4.38 million self-employed persons across the UK, marking a decrease from over 5 million at the beginning of 2020. This demographic needs to be particularly aware of the tax threshold set at £1,000; those earning below this may still need to submit a self-assessment form if they wish to contribute to National Insurance voluntarily, securing their entitlement to state pension and other benefits.
Lewis's warnings extend beyond tax concerns to workers receiving the national living wage. He highlighted alarming statistics showcasing around 371,000 individuals underpaid last year, as revealed by the Low Pay Commission (LPC). He advised employees to carefully examine their January payslips as the minimum wage is set for an increase next month. His statement emphasizes caution: "With the minimum wage set to jump in April, it's even more important all those on lower incomes don't just assume their employers are following the rules - even big names get it wrong."
The issue of wage compliance has been spotlighted with the LPC previously identifying 500 businesses for failing to meet statutory requirements. Lewis suggests practical ways for employees to gauge whether they are being fairly compensated. He outlines eight indicators of potential underpayment, including concerns about costs incurred for uniforms or safety equipment and ensuring all worked hours are compensated accordingly.
Employers are prohibited from using tips or overtime payments to supplement wages to meet minimum wage levels, which means any misapplication of these funds could lead to unintentional underpayment. Lewis cautions against taking apprentice wages if the job does not involve structured training, indicating this practice could inadvertently deceive employees about their compensation rights.
Baroness Philippa Stroud, the chair of the Low Pay Commission, reflected on the broader social impact of underpayment, expressing concern about low-paid workers feeling disconnected from protection mechanisms. She remarked, "Too often the low-paid workers we speak with feel powerless and cut adrift from the institutions which exist to protect them." This highlights the daily struggles faced by many employees who endure precarious conditions yet may hesitate to seek change due to fear of repercussions or job loss.
Taking action now is imperative for those who fall under the categories highlighted by Lewis. The overlapping deadlines for tax assessments and upcoming wage changes bring extra pressures, requiring both diligence and awareness. Self-employed individuals must prioritize submitting their tax returns to avoid unnecessary penalties, which can escalate harshly over time.
Likewise, lower-wage workers should be proactive about their earnings, ensuring compliance from their employers as the minimum wage increases. Lewis hopes to equip individuals with information and tools to assert their rights effectively, advocating for informed workers who are aware of their financial landscapes.
With the impending changes and deadlines, Martin Lewis's insights serve as both warnings and calls to action for millions across the UK—underscoring not just the mechanics of finance but the human experience of earning and managing one's livelihood.