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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi, My name is*****'m a 3D animator. I just quit

Customer Question

Hi,
My name is***** a 3D animator. I just quit a full time animation job in Sheffield and soon I'm starting another full time animation job in London. However, between this timeframe I would like to do some freelance work, which I've never done before.
I don't know how the taxation would work out for the money I receive for my freelance work. Do I need to setup my own company? Would this cause complications with my full time job? Also how do I bill my client?
I think you can tell how much of a beginner I am.
Many Thanks,
Andras
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Will you do freelance work after you start your new job? How long is the gap between your old job finishing and your new job starting?
Customer: replied 2 years ago.

I finished my full-time job on the 21st of this November and I'm starting my next full time job on the 5th of January in London. I would like to do some freelance for about 10-14 days from tomorrow probably.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me me while I draft my answer. It will take a while so please bear with me.
Customer: replied 2 years ago.

That's okay, thank you for your help.

Expert:  TonyTax replied 2 years ago.

Hi again.

Normally when you start doing work on a self-employed basis, you would register for self-assessment and complete a tax return after the end of the tax year on 5 April 2015. You can read about registering for self-assessment here.

Unless you intend to continue doing freelance work after you start your new job in which case you should register as self-employed, and as you appear to be intending to do it for a very short period, you might wait until after the end of the tax year and register for self-assessment to complete a one-off tax return by completing a paper form SA1 or an online SA1. Any tax you owe for 2014/15 will be payable by 31 January 2016 which is also the deadline for submitting an online tax return. A paper tax return needs to be submitted to HMRC by 31 October 2015.

Up to now, you could have a tax underpayment up to £3,000 collected through your tax code which you can read about here but the limit will be increased depending on your earnings level and you can read about that here.

As far as billing your client is concerned, all you need to do is type up an invoice on plain paper with your name on it, the client's name on it, a note of the work done (eg animation services provided), date it and hand it to them. Look here for some information on invoices. Clearly, you don't need your invoice(s) to be so detailed and you won't charge VAT unless you are billing over £81,000 which I very much doubt.

I hope this helps but let me know if you have any further questions.

Expert:  TonyTax replied 2 years ago.

A note about your invoice for freelance work. You obviously need to state the level of your fee on the invoice.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Yes I'll definitely look up samples of how an invoice supposed to look like.

Expert:  TonyTax replied 2 years ago.
Thansk and good luck in your new job.
Customer: replied 2 years ago.

So this one off tax return for this freelance work would be taxed separately from my full time job's salary?

If not, then this 10 days freelance work (about 2000 pounds) would be added to my yearly salary. Using a tax calculator I found out that, in that case my student loan would double.

So which way does it work?

Thanks

Expert:  TonyTax replied 2 years ago.
The client is unlikely to deduct tax at source from your fee. At the end of the tax year, if you complete a tax return, you will include all your income in the return,ie salary from two jobs and income and expenses from the freelance work. Assuming you have had the correct amount of tax deducted from your salaries, the only tax remaining to be paid will be that on your freelance profit.

Your student loan repayments are based on your total income for the tax year so the freelance income will have an effect. The self-assessment system will work out how much your student loan repayment will be and this will takle account of repayments made via your salary.

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