Tax and being a student freelancr
Updated: Feb 9
We've put together some helpful information that is important to be aware of regarding being a student freelancer. Be sure to do your own research but the below might be a good place to start.
(This is not financial or tax advice)
Do I need to pay tax as a Freelancr?
Venturing into the world of freelancing can be a bit of a mind boggle, so
it’s important to understand certain legal elements in order to help you
make informed decisions.
What is Tax and National Insurance?
Income tax is collected from wages, salaries and profits to fund public
services, such as the NHS, education and welfare system. As your
income increases, so does the amount of Income Tax you pay.
However, you only pay Income Tax once you earn above £12,500
National Insurance, on the other hand, applies to your pay every time
you get paid. You will pay National Insurance if you earn over £183 per
week, at a rate of 12% (2020/21). This type of tax contributes to state
benefits such as State Pension and Maternity Allowance.
Why do I need to know about tax and national insurance?
Usually, tax is taken off before you see it, if you are employed by a
company. However, when you are freelancing, you are working for
yourself, as a sole trader. This means you have to let the government
know how much you are earning so that you can pay your taxes
In freelancing with Unilancr, it is likely that you are just taking jobs as a
bit of extra cash, so you are unlikely to be required to pay tax on what
However, there is a legal requirement to register as a sole trader if you
earn more than £1000 in a tax year (April to April) as a freelancer. You
must register through HMRC and register for an annual Self-Assessment
each tax year to declare your earnings.
How to register with HMRC as a Freelancer and fill in a self-assessment
Registering as a sole trader is very straightforward. You can either complete the process online (https://www.gov.uk/set-up-sole-trader) or by phoning HMRC’s call centres to complete registration (0300 200 3500). Once you have registered, you are registered until you de-register, if you ever need to – so you don’t need to do this every tax year.
Once you are registered, it is very important that you keep track of receipts, invoices, income and expenses. You will need this to fill in your Self-Assessment. However, once again, this only needs to be completed if you earn more than £1000 from freelancing. If you do earn over £1000, you need to fill in the form, but you won’t be taxed on what you have earned.
You can check if you need to fill in a self-assessment form using a quiz on the government website (https://www.gov.uk/check-if-you-need-tax-return). To fill in your self-assessment, follow this link: https://www.gov.uk/log-in-file-self-assessment-tax-return.
If you miss your self-assessment deadline (which is usually October), you could be at risk of a fine, so it is very important that you do so, if you need to.
There is lots of support online for how to register as a sole trader and how to fill in a self-assessment. Below are some helpful guides that you might wish to use, if the above applies to you.
Freelancing on the side of another job
If you have another job alongside freelancing, it is important to understand what this may mean for tax.
Income tax is calculated based on the total amount you earn: anything above £12,500 (known as ‘Personal Allowance’) is a taxable amount.
If in your current job you earn over this amount and plan to take freelancing on as a side job, this amount should be taxed according to HMRC: therefore, it would be wise to register yourself as a sole trader.
Your employer doesn’t need to know that you are freelancing on the side (unless your contract stipulates you can’t).
However, like with the above, you will only actually need to register if you earn over £1000 a year from freelancing.
So, do I need to register with HMRC?
To summarise, when you are freelancing, you work for yourself, and so take responsibility for your own taxes.
You only legally need to register as a sole trader with HMRC and fill in a self-assessment each year if you earn over £1000 per year in freelancing (of course, you can also register if you aren’t).
Disclaimer: The above is not nor intended to be financial or tax advice. Contact a qualified financial professional if you require advice or guidance on tax or other advice.