Working as a freelancer brings flexibility and freedom because it isn’t the standard nine-to-five. By freelancing you can generate good income whilst enjoying being your own boss. Time is precious when you are chasing some exciting projects and juggling multiple clients at the same time. If you are a freelancer and accounting is not your forte then it’s not easy for you to keep your accounts in order. As a freelancer, you most likely are wondering how to reduce tax? Here are some rounded up ways to save tax for the UK freelancers.
Tips for Freelancers:
Consult with a Professional:
You can find great accountants in London to help you minimize your tax liability.
They can help you professionally in many ways like:
- Tax planning
- Tax structuring
- Advise on expenses to deduct
- Advise on maximizing tax allowances
You can totally focus on your freelance career by handing over your finance to a professional tax advisor or an accountant.
Yes, if you are a freelancer and working from your own home then, you can have an option of tax deduction. You will need to prove that your living space is also your workspace. Tax deductions would be based on which part of living space is used to provide your freelance services. If you are renting a building for working there as a freelancer then you can claim that home allowance to save tax.
Internet & Communication expenses:
As a freelancer, you are also eligible to claim internet & communication expenses as deductibles. And for that, you need to prove exactly what internet & telephone usage made while carrying out your freelancing services. You can not cover your entire internet and communication bill as a deductible but you need to prove how much of your time you use the internet for your freelancing services.
If you are a freelancer and you are paying for promoting or advertising your availability and skills then you can receive a deduction in your tax. This includes advertising by newspapers, media or it can also be advertising material like business cards, posters, brochures, site maintenance, and hosting. But you need to prove that deductibles are directly related to the promotion purpose of your services as freelancers.
Freelancers also have the option to make saving for their retirements and by doing that you can get tax relief. If you put every £100 into your pension as a basic tax rate taxpayer, then this will be topped up with an extra £25 by the government. There will be an extra tax relief on top of this to claim if you are paying a tax rate of 40%.
As a freelancer, you can deduct vehicle insurance, servicing, petrol, parking, repairs, license fees, breakdown cover if you can prove that the vehicle was engaged in work related to your freelancing service.
Membership & subscription expenses:
As freelancers, if you are using any paid publication subscription to broadening your work skills, which are provable beneficial to your freelancing services then you can claim those expenses. If you are a member of any professional organization and somehow it is for the benefits of your services then you can also claim those expenses and can save your tax.
Travel and meal expenses may be deducted if the trip is benefiting the freelancing services. You can claim traveling fairs, as well as hotel and guesthouse bills. You need to prove that these deductibles are related to your freelancing services by also providing receipts that match the time and date of your trip.
Legal & Financial expenses:
If you are a freelancer and consulting legal or financial professionals then you are eligible to claim expenses incurred in hiring them. You can also claim for insurance premiums to save tax. Whatever way you use to save your tax as a freelancer, it is important to be aware of correct documentation and paperwork. Consulting professionals would be much more beneficial if you have no time to look after accounting aspects.