The part-time freelancer
How to avoid tax hell
Growth in self-employment
2011 2013
300,000 new freelancers in 2 years
More part-time freelancers than ever
▪ Self-employed pay tax differently to permanent
employees
▪ Not taxed “at source” (P...
When should you register as self-employed?
▪ Straight away!
▪ Can register online - http://crch.co/1dB0abf
▪ Very latest i...
Very ballpark tax saving guidelines
Sole traders should save
30%for tax payments
Limited Co.’s should save
20%for tax paym...
How tax is paid
Permanent
employment
income
Freelancing
income
Class 1
National
Insurance
Class 2 & 4
National
Insurance
I...
Income tax rates
Permanent
employment
income
Freelancing
income
Personal
Allowance
(0%)
£0
£10,000
£20,000
£30,000
£40,000...
Whose responsibility?
Income Tax and NICs paid through
PAYE by your employer (but you’ll
need these figures to calculate t...
Other resources
In-depth explanation - http://crch.co/1fkWZ5X
Register as self-employed - https://www.gov.uk/set-up-sole-t...
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Part-time freelancing - how to avoid tax hell

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Earning money from full-time employment and freelancing can complicate your tax affairs significantly - it's important to understand how both income streams are taxed.

The Freelance Advisor team run through the Income Tax and National Insurance implications of moonlighting!

Published in: Business
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Part-time freelancing - how to avoid tax hell

  1. 1. The part-time freelancer How to avoid tax hell
  2. 2. Growth in self-employment 2011 2013 300,000 new freelancers in 2 years
  3. 3. More part-time freelancers than ever ▪ Self-employed pay tax differently to permanent employees ▪ Not taxed “at source” (PAYE) - pay at Self Assessment every January ▪ More leg-work to calculate tax owed & save appropriately
  4. 4. When should you register as self-employed? ▪ Straight away! ▪ Can register online - http://crch.co/1dB0abf ▪ Very latest is October 5th AFTER tax year you became self-employed Example ▪ Started freelancing in July 2013 (2013/14 tax year) ▪ 2013/14 tax year ends 5th April 2014 ▪ Must register by 5th October 2014 ▪ Must file first Self Assessment by 31st January 2015
  5. 5. Very ballpark tax saving guidelines Sole traders should save 30%for tax payments Limited Co.’s should save 20%for tax payments
  6. 6. How tax is paid Permanent employment income Freelancing income Class 1 National Insurance Class 2 & 4 National Insurance Income Tax
  7. 7. Income tax rates Permanent employment income Freelancing income Personal Allowance (0%) £0 £10,000 £20,000 £30,000 £40,000 £50,000 Basic rate (20%) up to £31,865 Higher rate (40%) up to £150,000
  8. 8. Whose responsibility? Income Tax and NICs paid through PAYE by your employer (but you’ll need these figures to calculate tax on your freelancing income at Self Assessment) Income Tax - paid by you at Self Asse Class 2 NICs - paid by you weekly if profits over £5,725 Class 4 NICs - paid at Self Assessment on profits between £7,755 and £41,450 Permanent employment income Freelancing income
  9. 9. Other resources In-depth explanation - http://crch.co/1fkWZ5X Register as self-employed - https://www.gov.uk/set-up-sole-trader

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