You file your return, HMRC tells you what you owe, then you pay. Simple — but the methods matter.

Methods

• Online banking or debit card.
• Direct debit.
• At bank or Post Office (fewer options now).
• By phone.

Deadlines

• 31 January: balancing payment + first payment on account.
• 31 July: second payment on account.

Tips

• Pay a few days early to clear through banks.
• Set up Time to Pay if struggling.

Knowing what’s deductible is the heart of freelancer tax. HMRC’s test: expenses must be “wholly and exclusively” for business.

Commonly allowable

• Software, subscriptions, hosting.
• Office supplies, stationery.
• Professional fees (accountant, solicitor).
• Insurance premiums.
• Marketing, ads, website costs.
• Travel to client sites.

Mixed-use

• Phone bills: claim business proportion.
• Home internet: claim % used for work.
• Vehicle: claim mileage or apportion costs.

Not allowable

• Personal clothing (unless protective).
• Client entertainment.
• Fines and penalties.

Example

You pay £600 for a laptop used 80% for work. Claim £480 as an expense.

The VAT threshold decides when you must register and start charging VAT. Understanding it avoids accidental penalties.

When to register

• Track rolling 12-month taxable turnover.
• Threshold is currently £85,000 (check HMRC for updates).
• Register within 30 days of crossing it.
• Option to register voluntarily if clients reclaim VAT.

What changes

• Add VAT to invoices.
• File VAT returns quarterly.
• Keep digital records under MTD rules.
• Pricing must reflect VAT impact.

Example

Sam’s freelance turnover hits £87,000. He must register. Charging 20% VAT means a £1,000 job becomes £1,200 for non-VAT clients.

As a freelancer in the UK, you’re taxed just like any other self-employed business. That means you can claim a range of allowances that reduce the amount of income subject to tax. Understanding them — and keeping the right records — can make the difference between an unnecessary tax bill and money in your pocket.

The Big Three

1. Personal Allowance
Everyone gets a tax-free allowance each year before paying Income Tax (currently £12,570 for most people). If your total income is below this, you won’t pay tax at all.

Good records make tax season boring, not painful. Set a lightweight system and stick to it.

What to keep

• Invoices issued and received.
• Bank statements and payment processor exports.
• Receipts for business costs.

How to keep it

• One business bank account for all trading.
• Monthly folder for documents.
• Spreadsheet or accounting tool with basic categories.

Routine

• Weekly: capture receipts.
• Monthly: reconcile bank transactions.
• Quarterly: estimate tax and set aside cash.

Retention

• Keep records for required years in the UK.
• Store backups in the cloud and locally.

IR35 is a set of tax rules for contractors working through limited companies. It tests if you’re really self-employed or an employee.

Key tests

• Control: who decides how and when you work.
• Substitution: can you send someone else.
• Mutuality of obligation: is there guaranteed work and pay.

Why it matters

• Inside IR35: taxed like an employee, less take-home pay.
• Outside IR35: normal contractor tax rules apply.

Example

If you work full-time at one client, same hours as staff, no substitution, HMRC may class you inside IR35.

Invoices that get paid share the same traits: clarity, accuracy, and easy payment options.

Essentials

• Your name, address, and contact details.
• Client details and a unique invoice number.
• Clear description, date, and payment terms.
• Bank details or payment link.

Terms

• Standard terms like 7 or 14 days.
• Late fee policy stated upfront where appropriate.
• Deposit for long projects.

Workflow

• Send invoices immediately at milestones.
• Automated reminders before and after due date.
• Offer multiple payment methods where feasible.

Freelancers thrive on effective workflows. These hacks can help you stay sharp and productive.

Good invoicing practices help keep your freelance business running smoothly. Here are some practical tips.

Getting started with freelancer taxes can feel overwhelming. This post covers the basics you need to know.