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A few questions about starting out
Thread poster: clairemcn
clairemcn
United Kingdom
Local time: 17:56
Member (2013)
French to English
+ ...
Jan 11, 2013

I'm planning to start freelancing this year while continuing to work at the day job (part time) and am just trying to gather as much information as possible so that I'm as prepared as I can be! I would be really grateful if anyone could help me out with the following:

1) Registering as a freelancer - do I just register as 'self employed' and fill in a self assessment form at the end of each financial year? I don't need a register as a business with a business name or anything?

2) Do I need an accountant for the tax stuff, or is it simple enough to fill in the forms on your own if you haven't done that much work?

3) Regarding National Insurance - I've read here that translators have to pay both Class 2 and Class 4 contributions. Does this still apply if you have a day job and are paying NI through PAYE?

4) Is it possible to take on a few jobs now (maybe one a month) without registering as self-employed to see how I get on and have them considered 'one offs' without paying tax? I remember reading something like this a while ago, but don't remember what exactly the advice was. Or do you have to declare absolutely everything you earn?

I'd appreciate any advice!


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Tom in London
United Kingdom
Local time: 17:56
Member (2008)
Italian to English
Accountant? Jan 12, 2013

clairemcn wrote:

I'm planning to start freelancing this year while continuing to work at the day job (part time) and am just trying to gather as much information as possible so that I'm as prepared as I can be! I would be really grateful if anyone could help me out with the following:

1) Registering as a freelancer - do I just register as 'self employed' and fill in a self assessment form at the end of each financial year? I don't need a register as a business with a business name or anything?

2) Do I need an accountant for the tax stuff, or is it simple enough to fill in the forms on your own if you haven't done that much work?

3) Regarding National Insurance - I've read here that translators have to pay both Class 2 and Class 4 contributions. Does this still apply if you have a day job and are paying NI through PAYE?

4) Is it possible to take on a few jobs now (maybe one a month) without registering as self-employed to see how I get on and have them considered 'one offs' without paying tax? I remember reading something like this a while ago, but don't remember what exactly the advice was. Or do you have to declare absolutely everything you earn?

I'd appreciate any advice!


It sounds to me as if you may to consult an accountant. If you happen to be in London and want me to suggest one, pls contact me privately.


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Steve Booth  Identity Verified
Local time: 17:56
Member (2007)
English to Arabic
+ ...
basically Jan 12, 2013

1. yes you ju8st register as sefl employed and fill an assessment out at the end of the year

2. you don't need an accountant the forms are fairly easy i suppose it depends how much you earn from your freelancing whether you get an accountant or not

3. Yes you have to pay some NI contributions its not a great deal but even if you are in a full time job you will still need to pay some

4. no you cannot take any jobs without declaring them you should register as sefl employed as soon as you start working and declare everything as you will be liable for tax.
I assume that your other job will have all your tax free earning allowances allocated to that


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clairemcn
United Kingdom
Local time: 17:56
Member (2013)
French to English
+ ...
TOPIC STARTER
Tax questions Jan 13, 2013

Brilliant, thanks.

Can't wait to get started now!

One more thing - how do you deal with unpaid invoices when you fill in the self assessment form? Do you only include work that you've already been paid for?


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clairemcn
United Kingdom
Local time: 17:56
Member (2013)
French to English
+ ...
TOPIC STARTER
One more thing Jan 13, 2013

Oh and another thing I meant to ask...

- Once I register as self-employed, am I obliged to pay all the relevant NI contributions for that tax year? Even if I don't make much/any money? Is it possible to end up losing money?

- If I were to register and start working now, near the end of the tax year, do I just make the relevant NI contributions from now until April?


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Russell Jones  Identity Verified
United Kingdom
Local time: 17:56
Italian to English
Quoting from HMRC website Jan 13, 2013

"To arrive at the profits it is necessary to draw up accounts using the
methods which accountants have developed for dealing with income that has
been earned but not received, expenses which have been incurred but not
paid or paid but not fully used, and so on."
From HS222, here: http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=zpQ_d9oQEnY&formId=3045

"During periods when you are unable to work and where you have registered your work status with the Department for Work and Pensions, HMRC will be notified. They'll adjust the amount of Class 2 N.I. contributions due for those periods."
From: http://www.hmrc.gov.uk/working/intro/class2.htm#4
Not strictly an answer to your question, but it seems to confirm the principle (as I remember it from many years ago when starting out as self employed) that you only pay for the weeks you are working.

Class 4 N.I. contributions of course are based on your annual profits and are calculated with your annual tax return.
http://www.hmrc.gov.uk/working/intro/class4.htm#2


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Ty Kendall  Identity Verified
United Kingdom
Local time: 17:56
Hebrew to English
Tax Questions Jan 13, 2013

1) Unpaid invoices - you don't declare them - you don't (and probably can't) pay tax on income which hasn't "come in". (See: http://www.proz.com/forum/money_matters/63492-uk_tax_return_can_i_do_anything_about_unpaid_invoices.html ).

2) NI contributions - you only pay Class 2 and 4 contributions for the time you are registered as self-employed, they aren't usually backdated (they can be voluntarily) and like most other taxes they are threshold-based - if you don't make "much money" you won't pay anything (if your earnings are less than £5,595 for 2012-13 you won't pay any Class 2s and you won't pay any Class 4s on anything less than £7,605). Basically, you won't lose money, if you don't earn that much, you won't end up paying any tax whatsoever.


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clairemcn
United Kingdom
Local time: 17:56
Member (2013)
French to English
+ ...
TOPIC STARTER
Advice Jan 13, 2013

Thanks for your advice!

So the NI contributions (Class 2 and 4) are paid at the end of the tax year, not during it?

It's a bit more complicated as I'll be earning money in a day job and paying PAYE tax and NI through that... are those limits for total income or just the self-employed income?


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Susanna Garcia  Identity Verified
Local time: 17:56
Italian to English
+ ...
Spain Jan 13, 2013

Sorry, Claire but where are you resident? The responses are referring to UK regulations and it looks to me like you're in Spain, in which case, it's a different ball game.

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Skallagrimson  Identity Verified
United Kingdom
Local time: 17:56
Latvian to Russian
+ ...
take a look into FreeAgent – Accounting for Humans Jan 13, 2013

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clairemcn wrote:

Brilliant, thanks.

Can't wait to get started now!

One more thing - how do you deal with unpaid invoices when you fill in the self assessment form? Do you only include work that you've already been paid for?


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clairemcn
United Kingdom
Local time: 17:56
Member (2013)
French to English
+ ...
TOPIC STARTER
Residency Jan 13, 2013

Susanna Garcia wrote:

Sorry, Claire but where are you resident? The responses are referring to UK regulations and it looks to me like you're in Spain, in which case, it's a different ball game.



I'm in Spain but only temporarily. I'm not tax resident here, as I'm not here for enough days. I'm tax resident in the UK, where I'll be back (physically) by June. I wouldn't dream of setting up as autonomo here! The crazy autonomo fees are one of the reasons I ruled out Spain as a place to live permanently.


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Ty Kendall  Identity Verified
United Kingdom
Local time: 17:56
Hebrew to English
Unusual circumstances... Jan 13, 2013

clairemcn wrote:

Thanks for your advice!

So the NI contributions (Class 2 and 4) are paid at the end of the tax year, not during it?

It's a bit more complicated as I'll be earning money in a day job and paying PAYE tax and NI through that... are those limits for total income or just the self-employed income?


They ask for my class 2s periodically (quarterly I think). Class 4s are done along with income tax with the self-assessment.

I'm not sure about your second question, it all gets a bit complicated if you have more than one job and Susanna raises a good point, you have more than one "unusual" circumstance which will complicate matters. (Although I thought you said something about relocating back to the UK in another thread - but I could be mistaken and thinking of someone else there).

You'd be better off calling/emailing HMRC with the exact details of your finances which you obviously can't share here and they will be able to give you more precise advice.


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Skallagrimson  Identity Verified
United Kingdom
Local time: 17:56
Latvian to Russian
+ ...
are those limits for total income or just the self-employed income? Jan 13, 2013

You may start with this link: http://www.hmrc.gov.uk/selfemployed/

Ty Kendall wrote:

clairemcn wrote:

Thanks for your advice!

So the NI contributions (Class 2 and 4) are paid at the end of the tax year, not during it?

It's a bit more complicated as I'll be earning money in a day job and paying PAYE tax and NI through that... are those limits for total income or just the self-employed income?


They ask for my class 2s periodically (quarterly I think). Class 4s are done along with income tax with the self-assessment.

I'm not sure about your second question, it all gets a bit complicated if you have more than one job and Susanna raises a good point, you have more than one "unusual" circumstance which will complicate matters. (Although I thought you said something about relocating back to the UK in another thread - but I could be mistaken and thinking of someone else there).

You'd be better off calling/emailing HMRC with the exact details of your finances which you obviously can't share here and they will be able to give you more precise advice.


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clairemcn
United Kingdom
Local time: 17:56
Member (2013)
French to English
+ ...
TOPIC STARTER
Complicated situations Jan 13, 2013

Ty Kendall wrote:

clairemcn wrote:

Thanks for your advice!

So the NI contributions (Class 2 and 4) are paid at the end of the tax year, not during it?

It's a bit more complicated as I'll be earning money in a day job and paying PAYE tax and NI through that... are those limits for total income or just the self-employed income?


They ask for my class 2s periodically (quarterly I think). Class 4s are done along with income tax with the self-assessment.

I'm not sure about your second question, it all gets a bit complicated if you have more than one job and Susanna raises a good point, you have more than one "unusual" circumstance which will complicate matters. (Although I thought you said something about relocating back to the UK in another thread - but I could be mistaken and thinking of someone else there).

You'd be better off calling/emailing HMRC with the exact details of your finances which you obviously can't share here and they will be able to give you more precise advice.


I have already called HMRC and they basically said that I'm considered tax resident in the UK but because I've spent part of the tax year working abroad, I need to file a self-assessment with details of my PAYE job in England that I left in September, my Spanish job and any self-employed work I do. The guy on the phone said it shouldn't be too messy/complicated but perhaps in reality it will be!

How do the Class 2s work? They send you a bill in the post every few months and you pay them by bank transfer...?


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Russell Jones  Identity Verified
United Kingdom
Local time: 17:56
Italian to English
Class 2 payments Jan 13, 2013

clairemcn wrote:

How do the Class 2s work? They send you a bill in the post every few months and you pay them by bank transfer...?



Mine are paid by direct debit every 4 weeks (not monthly) but I believe there are other options, e.g. 6 monthly. Presumably bank details are required when you register as self employed. They send me a schedule of payment dates and amounts every so often.


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