Freelancing offers freedom and unlimited earning potential — but means managing your own tax and finding clients. Whether it's a side hustle or full-time career, here's what you need to know.
Setting Up as a Freelancer
Getting started is straightforward.
- Register as self-employed with HMRC within 3 months
- Set up a separate bank account for business income
- Keep records of ALL income and expenses
- Self Assessment deadline: 31 January (online)
- Consider professional indemnity insurance
Understanding Freelancer Tax
You pay Income Tax and NI on profits (income minus expenses). Same £12,570 Personal Allowance. Set aside 25-30% of every invoice for tax — never spend your tax money.
Finding Your First Clients
Tell your network, create profiles on Upwork/Fiverr/PeoplePerHour, offer competitive rates for testimonials, and cold-email 10 potential clients per week.
Managing Irregular Income
Pay yourself a fixed monthly 'salary' from your business account. Aim for 3-6 months expenses in reserve (larger emergency fund than employees need). The zero-based budget works well for variable income.
Frequently Asked Questions
Do I need an accountant?
Not legally, but a good accountant costs £200-500/year and typically saves more than they charge.
Can I freelance while employed?
Usually yes — check your contract for restrictive covenants. Register with HMRC for any freelance income over £1,000/year.
What expenses can I claim?
Anything 'wholly and exclusively' for business: equipment, software, phone bills (business portion), travel, training, and home office costs.
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