Freelancers
What about the money
Before you start to freelance, you will need to determine if you are to be Self Employed (ie responsible for your own tax) or PAYE (paid as an employee). If you are in any doubt, you should always contact your accountant or financial adviser.
For full information on tax and national insurance matters visit the Inland Revenue website. www.hmrc.gov.uk
Although Media Recruitment can't offer specific tax advice, we are able to provide an overview of your options.
- AYE – This is the same as being employed as a permanent staff member with all the additional benefits that this brings. For example, paid holiday (usually 1.66 days for every month worked), statutory sick and maternity pay. All you will ever need to do is hand in your P45 at the start of each assignment and your tax and National Insurance will automatically be deducted, leaving you with your net pay.
- Limited Company – This you can create yourself, or form a composite limited company with others. These Umbrella companies serve as a single limited company for a large number of freelancers. Composite companies offer individual workers a share of a company that is fully managed and receive dividends. The benefits to both your own or composite company, is that you will have the ability to offset expenses against tax. For some freelancers, not having income tax and NI deducted at source means that cash flow can be more easily managed, although you will have to budget and account for two larger tax demands within each calendar year. In almost all cases Limited Company freelancers receive no paid holiday and any associated employee benefits such as sickness pay, pensions or medical cover will have to be met by you.
- Advice on this can be found at www.businesslink.gov.uk.
