Freelancing and side hustles have surged in popularity throughout the UK—whether you are creating logos, providing online tutoring, or selling handmade items on Etsy. However, many new freelancers tend to overlook one crucial aspect: taxes.
If your self-employment income exceeds £1,000 annually, HMRC mandates that you register for self-assessment and file a tax return. This requirement applies even to ‘casual’ income, regardless of whether you are also employed full-time elsewhere.
✅ Important Tax Obligations for Freelancers:
Registering with HMRC1
You are required to register as self-employed by 5 October following the conclusion of the tax year in which you began earning. The online registration process is quick but vital to avoid incurring penalties.
Maintaining Accurate Records
It is essential to monitor all income and allowable expenses—such as software subscriptions, home office expenses, travel, and supplies. This practice supports your tax return and ensures you do not overpay.
Submitting a Self-Assessment Tax Return
Annually, typically by 31 January, you must submit your tax return and remit any taxes owed. Melon Accountants can assist you in preparing and filing it accurately and punctually.
National Insurance Contributions (NICs)
Freelancers generally pay Class 2 and Class 4 NICs, contingent on their profits. This payment contributes to your state pension and benefits.
???? Are You Eligible to Claim Expenses?
Certainly. Common allowable expenses for freelancers encompass:
Internet and mobile bills (proportional use)
Equipment and software
Business-related travel
Marketing and website expenses
Claiming legitimate expenses reduces your tax liability. However, it is crucial to retain receipts and maintain clear records.
???????? How Melon Accountants Can Assist
We collaborate with freelancers at every phase—whether you are just beginning or aiming to transition to full-time. We will help you:
Register accurately with HMRC
Establish straightforward bookkeeping
Comprehend what you can claim
File precise, timely tax returns
Final Thoughts
Do not allow taxes to hinder your side hustle. With some planning (and the right support), you can navigate this aspect successfully.
