Advice - General / Tax and National Insurance

As a self-employed freelance journalist you are responsible for paying your own Income Tax and National Insurance.

Income Tax

When you start trading as a freelance journalist, you should register as self-employed with the tax office. Complete the registration form - see the link below. .

Self-assessment

Self-assessment tax returns are sent out every April, and must be returned by the end of October or, if you or your accountant are happy to do all the tax computations and you file online, by the end of the following January (along with the payment!).

Under the Self-Assessment scheme, freelances must keep full records of income and expenditure - and preserve them for five years and ten months after the end of the tax year to which they relate. "Full records" include all payment vouchers, P60 forms issued at the year end by any clients that deduct tax at source, and receipts for all expenditure.

Freelances have to make payments of the tax due in two half-yearly chunks, in January and July. Under the Self-Assessment scheme, tax payments are estimated amounts paid on account with a refund or surcharge made the following year once the actual figures are known.

Under Self-Assessment everyone has a tax reference number. Make sure you know yours: it can be helpful in proving to clients that you are properly registered as self-employed with the Inland Revenue. It does not, however, give you the right to be considered self-employed with respect to work which the Inland Revenue decides should be taxed as employment. See Employment status.

National Insurance

National Insurance payments for self-employed people fall into two categories:

  • A regular, monthly payment of a flat rate, known as Class 2. Most freelances find it simplest to pay this by direct debit.
  • In addition, there is an extra, earnings-related payment, Class 4, which you pay along with your Income Tax.

If some of your work is taxed at source you will also be paying Class 1 National Insurance - the "employee's contribution". If this is the case you may end up paying more National Insurance than is required from one person, in which case you should be entitled to a rebate. Discuss this with your local National Insurance office.

Tax credits

Any freelance aged 25 or over who works at least 30 hours per week and whose income after expenses and so on falls below a certain level can claim Working Tax Credit. Those over 16 who have children can claim Child Tax Credit.

When the Freelance tried the site out in September 2011, it said that a single person under 50 with a no children and a taxable income of £12,000 - working more than 30 hours a week - was (at that time) entitled to £233 a year, and those with lower taxable incomes progressively more - up to £1489. There is more for people over 50 returning to work and for people with disabilities.

"Taxable income" is what is left after you subtract business expenses, pension payments and so on from your turnover but before paying Income Tax and National Insurance.

 
More advice and links...
* Tax credits from HM Revenue & Customs
* Money from the government the Freelance on tax credits
* Tax returns for the self-employed from HM Revenue and Customs - incl. registration
* HM Revenue and Customs (ex Inland Revenue)
[www.londonfreelance.org]
* Rates for the Job good, bad and ugly
* Join the NUJ to get individual advice & representation

Text © Mike Holderness & previous contributors; Moral rights asserted. Comments to ffg@londonfreelance.org please. You may find the glossary helpful.

The National Union of Journalists must not, can not and would not wish to dictate rates or terms of engagement to members or to editors. The information presented here is for guidance and as an aid to equitable negotiation only.

Suggestions apply to contracts governed by UK law only. In any event, nothing here should be construed as legal advice.