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UK Tax / National Insurance / Being self-employed etc
Thread poster: Sophie Paterson
Sophie Paterson  Identity Verified
United Kingdom
Local time: 08:18
Spanish to English
+ ...
Jul 27, 2007


I'm just starting out as a freelancer, and although at the moment I don't earn enough to take me over the UK tax threshold (am still a student), at some point I'm hoping to freelance full-time and hopefully make my living out of it...

But! I'm at a complete loss as to how to go about organising all the money matters. I don't even know what questions to ask! So if anyone could give me a clear, step-by-step guide as to how I go about declaring myself self-employed, what tax code I might need to ask for(???), what I have to do as regards tax on invoices, making NI contributions etc, that would be so helpful!! It's all a bit of a confusing mess in my head at the moment.

Oh, also, what happens if I need to get a part-time job alongside the freelancing? What do I do about tax in that case?

Sorry if these seem very silly, obvious questions; unfortunately finance has never been my strong point.....

Thanks very much in advance.

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Anita Cassidy  Identity Verified
United Kingdom
Member (2005)
English to German
HMRC website Jul 27, 2007

The HMRC website contains a lot of information on self-employment:

This should really answer all your questions. If not, feel free to ask.

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Carole Paquis  Identity Verified
United Kingdom
Local time: 08:18
Member (2007)
English to French
Visit your local tax office Jul 27, 2007

They are very helpful and pleasant and will explain lots of things to you. They will also point you in the right direction if you need other info.
I have been self-employed 13 years and they have always been my first port of call, including on some very specific matters.

Besides, face to face is always better.


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Martin Hood  Identity Verified
Local time: 09:18
+ ...
Declare yourself 'Self-Employed' Jul 27, 2007

Well, you can do just that in the UK - declare yourself self-employed. From then on you will be self-employed. As far as the legal bit is concerned, you will need to inform your local tax office, they are listed in the phone book, that this is what you have done. You have three months to do this. That is essentially it. As far as NI is concerned you can apply for an exemption, if you believe your NET annual income is going to be below £4,635.00. If you expect to earn more than this you will need to pay class 2 national insurance, presently £2.20 per week. This can be paid monthly by direct debit. As far as other work is concerned, this will be taxed separately.

The only slightly complicated aspect is in relation to your annual Tax return. You will receive it each year around April / May and the deadline for return is January 31st the following year. In this form you will declare all income for the previous tax year April -April. The complicated bit is that your self employed year may not be the same (April -April). The form does, however, come complete with full instructions.

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Armorel Young  Identity Verified
Local time: 08:18
Member (2004)
German to English
Don't worry, it's not difficult Jul 27, 2007

Welcome, Sophie, and good luck in your career!

It's remarkably easy to be self-employed in the UK. As Martin says, you need to register as self-employed, and you need to do this regardless of whether your income is above or below the tax threshold. You can register very simply over the phone - and ask any questions at the same time - by calling the Helpline for the Newly Self-Employed, which (if the details I have are still correct) is 08459 15 45 15. As I understand it there is no need to inform your tax office separately, as once you are "in the system" that side of things will be taken care of automatically - the crucial thing being, of course, the self-assement form that you will receive for completion at the end of the financial year.

When you register, someone will talk you through the NI situation (and you may want to make voluntary contributions even if you are below the threshold, to safeguard your pension and benefit rights for the future).

There are no tax implications for invoices - you clearly won't be charging VAT, so you just invoice for the amount of money you are charging the client. It goes without saying that you need to keep a careful record of invoices sent/money received so that at the end of the tax year you can readily tot up your income and declare it for tax purposes. Exact methods are up to you, but I keep a file with a paper copy of all invoices - marking each one as it is paid, so it serves to tell me too if any invoices need chasing - and I keep a computerized spreadsheet too. Don't forget to keep a record, too, of expenses incurred so that you can offset these against tax. For example, I estimate that 80% of the things I do on my computer are work-related, so I declare 80% of computer expenses (e.g. broadband subscription) as translating expenses.

As for taking a part-time employed job, that again is not a problem. When you take on a paid job, tax is of course an employer's responsibility through the PAYE system. When I was involved with this (many years ago) I seem to recall that one of the things on the form to be filled in by staff starting work was a declaration "This is my only paid employment". If you have other (self-employed) work, you of course don't tick this declaration. The employer will then deduct tax at the standard rate through PAYE and at the end of the financial year give you a statement of earnings and tax deducted; you incorporate the information into your self-assessment form and the calculations will reveal whether you are owed a repayment of some of the tax you have paid (which is likely if you haven't worked a lot of hours).

Take the first step of registering as self-employed and I think you will find that everything slots into place from there - in particular, you will be sent various leaflets and brochures that will explain things to you (and I was invited to a free half-day seminar run by Revenue & Customs that was friendly and helpful).

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Sophie Paterson  Identity Verified
United Kingdom
Local time: 08:18
Spanish to English
+ ...
Thanks! Jul 27, 2007

Thank you very much to everyone for your help and advice - it's very reassuring to know that there are people out there who take the time and effort to give newbies like me some much-appreciated advice! I hope i'll be able to do the same for someone else at some point in the future.


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Horizon_LM  Identity Verified
French to Chinese
+ ...
These are also the informations that I need Sep 2, 2007

I do share same point of view with Sophie and I would like to join her to thank everybody here.


[Modifié le 2007-09-02 19:02]

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