Freelancers' Questions: Can I freelance in the UK as a foreign citizen?

Freelancer’s Question: I’m Spanish and am about to begin selling products from Spanish companies in the UK. I would like to do this as a freelancer, but I don’t know if the requirements to work this way would differ for me due to my nationality.

Furthermore, I have heard it said that I’m not supposed to pay taxes if my income is over £10,000 but, if that’s true; how would I invoice my customers and suppliers? I’m thinking about hiring an accountant, but I don´t know how much it could cost me, and my budget is small. Please advise.

Expert’s Answer: You don’t say whether you’re living in Spain or in the UK. I’m going to assume that you’re living in the UK, otherwise the rules might be different and you’d do best to check with the tax authorities in Spain.

If you’re a Spanish citizen but resident in the UK for tax, then you’d need to report to the tax authority in the UK, HM Revenue & Customs, your income that you earn anywhere in the world, and pay UK tax on it. But please note; if you’ve already paid tax on that income to another nation’s tax authority, for example, if you pay some tax in Spain, then you’ll be able to claim some tax back to avoid having to pay tax twice on the same income!

As for your business - assuming you’re living in the UK, and assuming you’re going to use the simplest business structure available here, which is a sole trader (also called being self-employed), you’d need to register your business with HMRC, so that they know to expect a tax return from you each year. A tax return is basically just a report showing all your income, including your business income.

For your business, as a sole trader in the UK, you’ll pay income tax and National Insurance on the profit your business makes. Its profit is its income less its day-to-day running costs. Assuming you don’t have any other income, you’ll start paying tax once your profits for the year go over £10,600, but you’ll pay two kinds of National Insurance - one, called Class 2 (a flat rate of £2.80 a week), once your profit goes over £5,965 a year, and the other, Class 4, once your profit goes over £8,060 a year. All these three limits are applicable as from 6th April 2015. They usually go up each year.

Then you would need to track your business’s income and day-to-day running costs, and I’d recommend doing this regularly using an easy-to-use online accounting tool, such as FreeAgent.

Please be aware; the above is only a very brief outline of what I suggest you should do, and so I recommend you find an accountant and speak to them for more guidance. Accountants aren’t always prohibitively expensive and, to be honest, money spent now is money saved later when it comes to your business accounts. Good luck!

The expert was Emily Coltman FCA, chief accountant at FreeAgent, an online accounting solution for freelancers and the self-employed.

Editor’s Note : Related Reading –

Freelancers’ Questions: What must I do now I’m freelance?

Freelancers’ Questions: How much to set aside for tax?

FreelanceUK's Directory of UK Accountants


28th April 2015

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