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.

It is important that you read the section below on National Insurance: you could lose out on your state pension if you do not.

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. You should to this by 5 October.

In order to complete a tax return online, you will need to open an online Government Gateway account. Allow more than a month for this process to be completed. See the link below.

Self-assessment

Your deadline for filing a Self-Assessment 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.

Freelances must keep full records of income and expenditure - and preserve them for at least 22 months after the end of the tax year to which they relate. The longest period for which you can be required to retain financial records for any purpose is six years. "Full records" include all payment vouchers, receipts for all expenditure claimed as expenses and P60 forms issued at the year end by any clients that deduct tax at source on the "Pay As You Earn" (PAYE) scheme..

If some of your income is paid PAYE you must complete both the PAYE return - which is largely automatic - and the Self-Assessment return for your other freelance income.

If you have a limited company it is important that you read "Setting up a Company", linked below.

Freelances have to make payments of the tax due in two half-yearly chunks, by 31 January and 31 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..

Make sure you know your tax reference number (Unique Taxpayer Reference or UTR): it can be helpful in proving to clients that you are properly registered as self-employed with the Her Majesty's Revenue and Customs (HMRC). Being registered does not, however, give you the right to be considered self-employed with respect to work which the HMRC decides should be taxed under the Pay As You Earn scheme or as if you were employed. See "Employment status", linked below.

Cash accounting or ‘proper’ accounting?

Since 6 April 2024 the default method of filling in your tax return has been the "cash basis"£.

The "cash basis" means that you record income on the date when it reaches you and you record expenditure on the date you pay. This is easy, because it means that your accounting record is your collection of bank statements - plus records of any allowable expenses that you pay in cash.

The alternative is "proper" accounting - known in the accounting trade as using the "accruals basis". Using this, you record income on the date when it fell due to you - almost always the date on your invoice - and you record expenditure on the date when you owed the money - almost always the date on the bill that you received. What you are recording, therefore, is the "accrued" balance of your debts and credits.

In practice, using the accruals basis means adjusting your accounts at the beginning and end of the year, taking account of the dates involved to decide what income and expenditure fell within the relevant tax year.

As always when dealing with HMRC, there is a price for ease. If you use the cash basis you are not allowed to claim the cost of "capital" items - such as cameras and computers - over several years. On the accruals basis, you can do this - claiming the so-called "depreciation" of capital items' values as an expense each year, until the capital value disappears. Probably this is the better thing to do if your income is increasing, since in later years you have more income against which to offset the depreciation. If you use the cash basis you can do this only for a car for business use.

Also, the amount you can claim for interest on loans is restricted under the cash basis.

Using the accruals basis can mean that you end up paying tax on income that you have not yet received. If the client fails to pay at all, you write your invoice off and reclaim that tax in a future year.

Which basis you should use depends on your exact financial circumstances - and especially your circumstances in future years!

Simplified expenses - at a price

HMRC also offers you a "simplified" scheme for claiming expenses. Here in particular HMRC imposes a price for ease. Notably, the amounts you can claim for the expenses of having a space to work in, or for a vehicle, are severely restricted. We do not recommend using this scheme.

National Insurance

You need to pay “Class 4” National Insurance contributions if your “profit” is more than £12,570 (threshhold applies from 6 April 2025).

You work out your “profit” by deducting your allowable expenses from your self-employed income and pay Class 4 contributions through your Income Tax Self-Assessment form.

There are also “Class 2” contributions. These are now “treated as having been paid” if you declare a profit of £6845 or more. If you earned less than this we strongly recommend making a “voluntary contribution” – currently £3.50 per week – to protect your pension entitlement: see below.

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. If this does not appear automatically whe you complete your tax return, discuss this with Her Majesty's Revenue and Customs. (Good luck getting through on the phone.)

When you first do any paid work in the UK you need to apply for a National Insurance Number – in effect opening an account with the government. See the link below.

See the link below for current self-employed National Insurance rates.

Topping up your National Insurance contributions

Your Class 2 National Insurance contribution history determines how much State Pension you can get, and certain benefits. It is important to make the necessary payments.

Since 6 April 2024, people with self-employed profits of at least £6725 per year are "treated as having paid" Class 2 contributions.

If your profits were less than that, you can – and almost always should – make "voluntary contributions" to "top up" your National Insurance history.

It has been possible to miss paying Class 2 contributions. It is possible to "top up" any gaps – and you should do this. From 6 April 2025 you can fill in gaps only six years back.

As moneysavingexpert.com points out, you are likely to get back tens of thousands of pounds by topping-up,

Tax credits and Universal Credit

Some freelances with low incomes will have received Working Tax Credit or Child Tax Credit. These ended on 5 April 2025: you can apply only for Universal Credit.

Everyone receiving Tax Credit, Child Tax Credit, Income Support, Income-based Jobseekers's Allowance, Income-related Employment and Support Allowance (ESA) and Housing Benefit without other benefits ahould be transferred to Universal Credit.

See the section on Benefits and pensions, linked below.