Freelancer's Questions – Freelancing on the side
I have a full time job but would like to do some freelance
work in my spare time. Is this possible from a tax point of view? If so, what is the best way of going about this, forming a company?
Answer - SJD Accountancy
The answer to your question is yes, it is possible to do.
As to the best way of doing things it really depends on what level of income you expect to get from this additional work. Anything less than about £10,000 a year and you really ought to register as self employed, and you need to do this within 3 months of starting to trade. You can do this on line here:
HMRC - Register
Once registered you simply need keep a note of your freelance income and expenses and then notify this information to the Inland Revenue once a year on the Self Assessment Tax Return which they will send out to you.
If you are likely to earn more than £10,000 a year then a more tax effective option would be to form your own Limited Company. The tax rate is lower, it provides more flexibility, and also gives potential customers the impression that you are a "proper" business. The downside is that there is far more admin involved which will mean employing the services of an accountant which will of course cost, but you should make enough of a tax saving trading through a Company to more than pay the additional fees.