Hi everyone! I would like to speak with freelancers in the UK. I need a piece of advice.
I have an opportunity to start a job as a freelancer in content creation, it would be the first time I work as a freelancer.
I am living in the UK but this company is based in the US.
Do I need to pay taxes? Because I heart that I need to wait until 6 months to start paying taxes.
THANKS IN ADVANCE!
Replies8
- @Sofia Furió You might be under the stauts set out by Kevin when he mentionned "IR35". It is something that is being enforced relatively recently, so I suggest you talk to an accountant, or at least HMRC. It looks like you will be treated as an employee, and the company will shift all the related contributions to you. You will be taxed accordingly and of course, it has to be taken into account when you set out your salary (otherwise you'll lose money).https://www.gov.uk/guidance/understanding-off-payroll-working-ir35
- @Kevin Thank you so much for your help! On the offer letter is written 40 working hours per week, from 8 am to 5pm - Monday to Friday. This company would pay me monthly. I havent signed anything yet because I am not sure about "being a freelancer"There is nothing related "freelance" in the offer letter, just the wording "Contractor position" - Is that the same as self-imployment?
- @Sandrine Bascouert Thank you so much for your help! On the offer letter is written 40 working hours per week, from 8 am to 5pm - Monday to Friday. This company would pay me monthly. I havent signed anything yet because I am not sure about "being a freelancer"There is nothing related "freelance" in the offer letter, just the wording "Contractor position" - Is that the same as self-imployment?
- I suggest you speak to an accountant, Sofia.You should be registered as a sole-trader (at least) when working as freelancer, that's a pretty normal legal form to do business in. When you need to file/pay your taxes depends on when and how you setup your business - an accountant will help you with this.One thing to also discuss with an accountant is IR35 - do this before you start taking on work as an ongoing contractor. HMRC will expect additional taxes paid for national insurance if the terms of your contract(s) look similar to you being an employee.
- At the end of the day, it really doesn't matter who you are working for, as a freelancer, if you are a UK resident, you have to pay taxes in the UK. Not in the USA.
- Someone correct me if I'm wrong, but if you want to work - as a freelnacer in the UK - you need to register (as a sole trader or a limited company), it's within this frame that you will pay taxes based on the income you draw from your activity as a freelancer (That means you could have a 9 to 5 job on the side and the income generated by this job would fall into the PAYE system where your taxes are paid at the source).Generally (but you can set it differently) the tax year starts on the 5th of April, you tax taxes in 2022 (deadline: end of year) for the money you earned between the 5th of April 2021 and the 4th of April 2022.So the amount you will pay will depends on the income between those dates. If you register your business and start earning money in March 2022, then you'll have only the income drawn in a month to pay at the end of 2022.Now the 6 months thing, is probably the fact that you can start earning money before you've registered, you have 6 months to register once you start earning some money.It's actually pretty simple to register, you'll have to pay what is called NIC2 (your national contributions that are due by everyone, unless you're on a very low income - around £13 per month) and possibly NIC4 which are to be paid once you reach a certain income threshold. Income taxes will have to be paid on top of that, again, depending on your income.Evereything is explained here:https://www.gov.uk/set-up-sole-traderHope it helps!
- @Kenneth Archbold Thanks for replying! Do I need to waint until 6 months to start paying taxes? or I need to do it the first day I start working as a freelancer?
- Yes. You will need to pay tax on any income you make (assuming you are registered in the UK). Even if it is from the US, you are the one that pays the tax as a freelancer.
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