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Effective tax planning is essential if you are to minimise your tax bills. Simple tax planning can significantly reduce your tax liabilities.

The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have complicated income tax affairs.

Corporation tax is charged on a company's profits. If you trade as a limited company, ensure that paying this tax is as painless as possible.

National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rates apply.

As well as your legal obligations, you’ll want to ensure that payroll is painless and that you use any opportunities to improve your tax-efficiency.

VAT

Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.

Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Take professional advice.

Business property taxes apply to businesses with commercial premises.There are two commercial property taxes: business rates and stamp duty land tax.

If you have tax problems or face a tax investigation, it pays to seek professional advice and you must act rather than just hoping for the best.

Freelancer earnings soar but inflation dents confidence

22 March 2022

Quarterly earnings for self-employed workers saw a dramatic increase in the fourth quarter of 2021, according to new data from freelancer body IPSE.

The Q4 2021 Freelancer Confidence Index, published by the Association of Independent Professionals and the Self-Employed (IPSE), has found that quarterly freelance earnings have hit their highest level since prior to the EU referendum in 2016. Quarterly earnings reached an average of £29,547 in Q4 2021 - up from £25,551 in Q3 2021.

According to IPSE, this represents a doubling of income since the start of the COVID-19 pandemic in Q2 2020. The rise in quarterly rates has been fuelled by the return of pre-pandemic levels of work in the self-employed sector, with self-employed workers experiencing the lowest average number of weeks without work since Q4 2019. In addition, day rates increased from £535 in Q3 2021 to £584 in Q4 2021.

However, the report has also found that freelancer confidence in the UK economy has fallen dramatically, from -13.2 in Q3 2021 to -19.1 in Q4 2021. This has largely been driven by reforms to IR35 in April 2021, which has remained the biggest detrimental factor impacting freelancers for the second quarter running. However, inflation is also a crucial factor; 81% of freelancers say they are worried about the cost of living and are predicting rising business costs over the next 12 months.

Freelancer debt is also a concerning issue, according to the IPSE report. The data shows that 38% of self-employed workers are in debt, with 16% now accruing debt via credit cards issued in the name of their self-employed business. The number of freelancers who say that they have no business debt in Q4 2021 (59%) is lower than the previous quarter (67%), indicating that the issue is worsening.

Derek Cribb, IPSE ceo, said: "Today's report shows that the self-employed sector is finally recovering after two years' of COVID-19 uncertainty. Work opportunities, day rates and quarterly incomes are soaring towards pre-pandemic levels and freelancers are now able to make a living from self-employment again.

"However, despite this, freelancer confidence has continued to slump as IR35 acts as a sword of Damocles on the industry. The government, therefore, needs to step in and solve the confusion around IR35 if the sector is going to reclaim its position as one of the most dynamic and innovative parts of the UK economy.

"Self-employment can be a driving force for economic growth but if it is to realise its full potential, the sector must be supported by government policies that seek to encourage, not hinder, it's natural vibrancy."

Written by Rachel Miller.

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