Invoicing

[Penguinpandarabbit]

I moved from employed to self employed end of last year but was just going through a freelance site which did invoicing.

Now I've been asked to do some consultancy work and they've asked me to invoice them. Can I do this without setting up as a business? I want to be careful my house isn't classified as business premises for selling so subject to capital gains tax but maybe that's different.

Do I need to register for NI? I paid NI whilst working so no advantage to me to pay more this tax year but not sure if its optional.

Thanks very much.

Did you register as self employed at the end of last year?

The questions you’re asking aren’t to do with whether you produce invoices or not, but your self employment status.

I told HMRC that I moved to self employed though its next Jan before first tax return.

What do you mean "without setting up as a business"? You can invoice as a sole trader, which I'm guessing is your current structure. If you are earning money through self employment you need to be registered with HMRC and do a tax return, even if not earning enough to pay tax. You are no obliged to pay NI under a threshold, but you can do it voluntarily, usually a good idea.

Then you can issue an invoice as a sole trader you don't have to be a company to issue invoices

Cross posted - as Georgie says it is your status that is most relevant.

Tax return can be done from April 6th, January is the final deadline and payment due date.

NI is now done via your tax return.

One feels you need to find an accountant to keep you on the right path. If you're registered as self employed then you are trading as a business....

Not true witch

How's it not true Georgie?

Thanks very much - useful to know that. I made need to get an accountant later but was approached with work they wanting starting this weekend and asked me for a proposal and an invoice. It's great work and pays very well - they offered me double what I asked for and doing the work is fine but never worked like this before. Used a freelancing site but that does all the invoices, totals everything and keeps records week by week and proposals on there are just in a standard very basic form.

Sole traders aren’t necessarily running a business. They aren’t the same thing.

Georgie, what do you think a sole trader is?

So far as your home address becoming subject to capital gains as a business, I believe that only starts to be an issue if you claim a proportion of your household expenses against your business costs (eg light, heating etc). I suspect there are situations where that is helpful to do. That is probably an area where a one-off discussion with an accountant would clarify things.

Thanks very much. I wasn't planning on claiming house bills back but we are shortly going to be selling property I am registered to and capital gains are over annual exemption. I found an accountants site where they had written a guide and looks like it should be fine as I just use part of a room which is used for other purposes:

www.krwaccountants.co.uk/krw-news/krw-q-a/item/working-from-home-what-are-the-capital-gains-tax-implications.html

Witch - I am self employed and work from home but don’t have to register my home as a business, pay business rates, or have a business back account etc etc. Therefore being a sole trader does not automatically mean your home needs to become a business address or apply for change of use etc.

I also do claim back an allowable potion of my household bills so python I’m not entirely sure they are linked. Maybe it depends on your type of business??

Georgie, I think you're a little confused. A sole trader is an individual trading as a business. It has nothing to do where they are trading from. My original comment stands.

Penguin - An accountant will advise you on Capital Gains etc - it is very rare for a sole trader to pay this, and usually happens when an individual doesn't understand the legislation around the area. This is why you pay an accountant.

Your main residence will never be subject to capital gains tax, only additional homes. You are already a "business" even though the other firm physically raises the invoices for you. Make sure you have some kind of system to keep track of invoice numbers for invoices you raise for other jobs, it needn't be complicated, just a master list or something. Well done on landing the lucrative work 👍

Also, I would definitely speak with an accountant for filing your tax return, but don't leave this until January as they are swamped at that time. I would suggest having an initial meeting with one sometime in the next few months as they can advise you on the best way forward, and give you guidance on how much you should be saving towards your tax bill as you don't want to be taken by surprise next January when the 18/19 bill and first payment on account for 19/20 will be due.

If this will be an ongoing set up, I'd highly recommend using QuickBooks.

It does have a monthly fee (tax deductible of course!) but is amazing for preparing you returns etc and quick reference for how much tax you should be preparing to pay.

Also has a great mobile app for tracking expenses etc

As a sole trader doing occasional consultancy work you should not need an accountant. There is lots of guidance online from HMRC. Invoices do need to include your UTR (unique tax reference) and various other things. The tax return is straightforward, you simply enter income and expenses as total figures and are taxed on the profit. Again HMRC give guidance on expenses.

I'm in your position. I'm a sole trader, registered as self-employed. (The work I do is website writing). I don't class myself as "running a business" as I'm not buying stock, adding value and selling on at a profit. I'm not employing anyone, it's just me and my laptop. My home insurance policy is fine about me working at home as i'm not having clients come into the house and I'm not holding stock here. It's really no different from me being employed in an office and doing one day a week working from home, from their point of view.

You don't really need an accountant for a straightforward tax return. I invoice customers using a Word template, and log all earnings on an Excel spreadsheet. Free accounting packages might be useful but unless you're having to track expenses too I wouldn't really bother. Certainly wouldn't pay out for one.

When it comes to the tax return and it asks for the name of the business, I just put my own name. There's also a box which asks the nature of the business where you could just write "freelance consultancy" or similar.

.

Thanks very much - QuickBooks looks good and its says you can get a months free trial.

We have moved to countryside so ended employed job in London and started freelancing late last year. Still have both houses temporarily switching primary residence. Through the freelance site the work is good but the pay is very poor so its only been around £500 a month after expenses which are just site fees. Now been offered £400 a day direct. I'm not sure how long it will be for - it was initially until the kids settled until new school but if I can earn well through it will continue it.

The reason I would say speak to an accountant first is because with all due respect it seems like you need a bit of pointing in the right direction, and there is some dodgy advice out there - e.g. include your UTR on your invoice - no please don't do this 🙄 no one needs to know your UTR!! It's not as expensive as it sounds and they can pay for themselves with advice about expenses you can claim e.g. for home office, travelling etc etc. Then yes, by all means use something like QuickBooks when you're on your way (although to be fair, for minimal invoicing, expenses you could just use and excel spreadsheet = completely free) good luck!