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Starting up as a freelancer? Not sure how to register with HMRC?

Discussion in 'General Forum' started by FreelanceUK, Sep 23, 2009.

  1. FreelanceUK

    FreelanceUK Administrator

    This question is frequently asked on the forum, so as well as our Starting Out section we've compiled a guide called Registering as self-employed: the basics. We hope you find it useful. Please do read these and search the forum for previous replies to check your question has not already been answered.

    Good luck!
    Last edited: Sep 23, 2009
  2. jcwazzu

    jcwazzu New Member

    Thanks! This is great!
  3. hubert

    hubert Banned

    I appreciate for sharing such useful link. I think it will be of great help for me.
  4. byron76

    byron76 New Member


    Hi guys,

    I am not sure, has anyone used peopleperhour.com?

    I am based in the French jurisdiction, and I was deactivated on false ground and this has cost me 1000 Pounds to say the least.

    Some info on the site are very strange, some double ups, some contradict eachother, anyway can you help me making them bend over so I can get my money back from them?

    Kind regards,

    karl Hopson likes this.
  5. coldlogic

    coldlogic New Member

    just started need some help

    Hello there,
    I am a graphic designer student and I just decided to take on some freelancing jobs. I registered my company and shortly after I got the confirmation I received a letter from HMRC containing a form asking me to fill in several details like when does my acc year start and when will it end. Bear in mind this is not a regular job I wont take one more than 3 monthly projects so I wont extend £150-£200 So my question is: What do I have to do now, do I need to pay somebody to do the accountancy work, considering that I get paid via paypal ,do I have to send all the paypal transaction details to HMRC will that do? Also how can I give a receipt ?
    This is so overwhelming I hope you guys can help me
    karl Hopson likes this.
  6. New Co Query

    Hi...is your Paypal account in the name of the company or your personal one?

    Reason I ask is that if you're only taking a few hundred quid a year, wouldn't bother with the company. Strictly speaking should declare it on a personal self assessment return if not going through the company but at that level HMRC are more likely to consider it as a hobby and therefore leave you alone.

    If not using the company, then you could fill in the details of the form (presume it's the CT41G?) and advise HMRC that the company isn't trading and in fact dormant. You could then keep it open for 12 months, if decide not using it then close it using form DS01 and a £10 cheque or alternatively complete the annual return (£14 Co House fee) and submit dormant company accounts (form DCA) to them.

    Any queries, PM me and will talk you through it.
  7. coldlogic, you can choose when your accounting year starts/ends. Usually people make it inline with the tax year starting April.
    Its so HMRC can calculate any possible tax due, on any income you make during that period.
    You dont need an accountant, I did all myself first time and only ended up paying 60p! lol
  8. coldlogic

    coldlogic New Member

    Thank you for your reply I have another question now
    When you say you did it yourself what did you do exactly? I mean I just designed a logo for a client and she paid me via paypal what do I need to do next Ive sent her an invoice so Ill print the invoice and keep all the invoices and then send them to HMRC? Apologies... I am so ignorant about all this
    So even if i registered my company last month can I start my acc. year in April ? I was under the impression that I have to do it in the 1st 3 months.
    Thank you again for all your help
  9. globaltrade

    globaltrade Banned


    Thanks that is great!
  10. AutoHertz

    AutoHertz New Member

    Ok i will do this. thanks dear for share the great post.....
  11. Emma84

    Emma84 New Member

    Starting out and confused

    Hello everyone, I'm new on here and need some advice regarding casual freelancing. I have read the pages suggested in this thread but still lost as to what we need to do.

    My husband and I would like to start freelancing. We have got some offers of work already. However not sure what we are supposed to do with tax or whether we are suppose to set ourselves up anywhere as a business.

    We both work full time so will only freelance in the evening. I don't think it is worth setting up as a limited company or sole trader and we won't be raking in enough cash to hire an accountant. Is there anything else we need to do before we start accepting jobs? Any help and advice would be much appreciated.
  12. Lupita

    Lupita Member

    Firstly Emma84, have a read of this piece (and the links too!)
    Registering with HMRC ? a freelancer's overview :: Freelance UK

    You and your hubby would need to register with HMRC as self-employed and you would be a sole trader but, as you say, unlikely to need a 'Ltd' at this stage.

    Also, in HMRC's eyes, "casual" freelancing = freelancing/self-employment; there's nothing casual about it! That said, you might be able to qualify for a SEE, (Small Earnings Exception) but read up on this in advance as I think it can impact other entitlements:
    Freelancers' Questions: Do I still need to be self-employed? :: Freelance UK

    Normally, HMRC's helpline isn't recommended a lot on this forum, or on other forums (and sometimes with good reason too), but if you're still :confused2 once you've read ALL the above, consider giving them a bell:
    HMRC Contact us

  13. Diane14

    Diane14 New Member

    Hi guys,thanks for the link that is great.
  14. claudcat210

    claudcat210 New Member

    Hello, I'm a newbie, and I really need some guidance.

    Basically I started working full time for a ltd company, I have a set wage, and I invoice weekly at the moment. I get paid on the same day as invoicing.

    My work agreement states I'm on a freelance basis for 6 months where after I will be put on payroll.

    I'm a bit confused as to what route I need to take now with registering with HMRC. As I am freelance in a sense but I'm technically not. I have looked at registering my own company but if I'm going on payroll in 6 months I can't really do this can I?

    Thank you for your help.
  15. faheem21

    faheem21 New Member

    How to: Freelancing and HMRC

    First things first...

    All of our experts agreed that once you start earning you must notify HMRC. Quentin Pain – accounting expert and founder of accounting software Accountz – advises that, “Failure to do so could result in a penalty. Register as soon as you can.”

    Any payment you receive as a freelancer won’t be taxed. Instead, you pay it after the end of the financial year, which is after 5 April 2013. You can submit a tax return online or by post.

    There’s also National Insurance to remember. “You may also need to register to pay Class 2 National Insurance if [your] profits are to be in excess of the earnings limit.” advises Alex Dyer, a partner at accountancy practice Theataccounts LLP – the earnings limit for self-employed people in this financial year (2012/3) is £5,595. You’ll also pay Class 4 National Insurance as well, but not until you submit your return.

    To sort this all out, freelance copywriter, marketing consultant and Guardian journalist Heidi Stephens recommends that you give HMRC a ring: “I set up a monthly direct debit for for my Class 2 NICS – about £10 a month.”

    Check with experts within the industry you work in whether you need to register for self-employment. There may be the option to pay tax as PAYE (Pay As You Earn).

    All of our experts agreed that once you start earning, you must notify HMRC. Quentin advises that, “Failure to do so could result in a penalty. Register as soon as you can.”

    Do you need an accountant?

    You do not have to have an accountant. Heidi says, “It depends how organised and numerate you are, and how many clients you have.” She takes half a day to sort out invoices and work out expenditure at the end of each month.

    However, accountants have a different view. Alex suggests that an accountant “can be beneficial in many ways and they can often save you more than they cost to hire.” They can do your tax calculation for you and provide tax advice in a language that you can understand.

    If you want one, how do you choose? “Speak to other freelancers and use their advice and experience,” says Alex. “If you do choose to appoint an accountant, always use one who has recommendations from existing clients who are getting the results they want.”

    Tax relief

    “You can offset capital expenditure costs like a new laptop against tax,” says Heidi. “You can offset 45p per mile for business travel, which is well worth doing.”

    Trying to sort it out can be tricky. Alex suggests that “deciding what an allowable business expense is can be confusing and this is when an accountant should help and advise.” Heidi suggests that “there are full guidelines on the HMRC website and lots of helpful forums online.”


    How much money should you put aside for tax? Quentin offers a simple calculation:

    Add up all your sales for the year
    Deduct all your allowable expenses
    Deduct your personal allowance
    Put aside 30% of the remainder for tax.

    Remember to keep invoices and reciepts.

    How do you keep on top? “I keep a log of all the work I do, with a different tab for each client,” suggests Heidi. “This all feeds into a main summary sheet, where I keep a record of my invoices and payments received. This one spreadsheet covers everything.”

    Two key dates to remember: if you are self-employed in this 2012/3 tax year, you’ll need to submit your tax return by post by 31 October 2013, or online by 31 January 2014.
  16. FreelanceScribbler

    FreelanceScribbler New Member

    Well, there's always cash in hand jobs for a discount :rollin
    It's not like builders don't do it all the time
  17. cheltax5678

    cheltax5678 New Member

    I think an accountants fees in the scheme of things are not very high and to be honest there are certain schemes that can save you at least this is tax/vat etc.

    You ay your company tax 9 months after the end of your accounting year, however you can set up a payroll to pay more as you go along.

  18. picil12

    picil12 New Member

    Don't know where to put this question, so I try here :)

    I was always wondering (couldn't find answer on internet) what if:

    e.g Client let's say wanted web design and paid 50% eg. on december; website was finished January but the balance client paid on May, which means after the 5th of April (end of tax year) How to deal with it?

    Should we still include in January Invoice? Since the project is from previous tax year? Yhhyyy confused :grin
  19. SuperDuper

    SuperDuper New Member

    Do I need to pay tax on EVERYTHING I earn, even small amounts - I have a full time job and do freelance work on the side, it is more a hobby of mine really... (I really don't make substantial sums)
  20. SFTUK

    SFTUK New Member


    I am Spanish, and I am about to start selling Spanish products from Spanish companies in the UK. I would like to start up as freelance, and I don´t know if I need a special requirement for being Spanish.
    Furthermore, some people told me that I am not supposed to pay taxes if my incomes are not over 10.000£, but I find it a bit strange, because in that way, how can I Invoice my customers and suppliers?.
    I am thinking about hiring an accountant, but I don´t know how much it could cost to me, and my budget is really tight...

    I feel very lost, and any help will be really appreciated!

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