Tax advice of the week: Go freelance
With the advent of the new 50% top rate of income tax, there are good reasons for becoming self-employed.
The new 50% top rate of income tax (which comes into force on 6 April next year) is prompting high-earners to look for ways of minimising the impact it will have, say Bob Rothenberg and Linda Bute in The Daily Telegraph. Some BBC presenters, for example, are choosing to go freelance and this may make sense for other people as well.
Self-employed people have greater scope to claim tax deductions for business-related expenditure (such as phone bills and travel). Freelancers can also "delay paying the 50% tax rate by... changing their accounts year end to 31 March. Anyone with an accounts year end of 30 April will already effectively be paying tax at 50% from 1 May this year on income above £150,000."
The downside of being freelance is that, unlike a full-time employee, you need to set aside funds for tax (and often accountancy), periods of no work, sickness and holidays. You also lose statutory redundancy rights.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?
Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
By Kalpana Fitzpatrick Published
-
What does Rachel Reeves’s plan for growth mean for UK investors?
Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
By Katie Williams Published