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Advice - General / Tax and National Insurance

As a self-employed freelance journalist you are generally 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

Your deadline for filing a tax return online is 31 January each year. The UK government is increasingly trying to discourage filing paper tax returns: the deadline for these is the previous 31 October. See the link below.

Under the Self-Assessment scheme, freelances must keep full records of income and expenditure - and preserve them for six years 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 claimed as expenses.

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 under the Pay As You Earn scheme or as if you were employed. 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 Her Majesty's Revenue and Customs.

Tax credits and Universal Credit

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 may have claimed Working Tax Credit. Those over 16 who have children may have claimed Child Tax Credit.

Very few people can make new claims for these credits. Those who receive them should take care not to disturb them or let them lapse. The exception is if you were entitled to the severe disability premium in the last month.

Instead you are asked to apply for Universal Credit.

When the Freelance tried out one of the recommended Universal Credit calculators in March 2020, it said that a single person in London aged 50 with no children and a "profit" of only £3000 and savings of under £6000 - working 32 hours a week - was (at that time) entitled to Universal Credit of £184.18 per week - plus an amount towards rent.

Note that Universal Credit is notoriously difficult for freelances, with requirements for frequent filings of income figures, delays in payment and very poor handling of variable income.

 
More advice and links...
* Tax credits from HM Revenue & Customs
* Tax returns for the self-employed from HM Revenue and Customs - incl. registration
* HM Revenue and Customs (ex Inland Revenue)
* Benefits calculator www.entitledto.co.uk
[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. The collection (database right) © National Union of Journalists. 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.