Freelance/tax return help

[Changingplace]

I’ve been offered a year long contract but they want to pay me as freelance.I may do the odd bit of work for another company freelance too.

I’m happy with this tbh because the salary they’ve offered me is really good but I’ve never been freelance before and I’m definitely overthinking paying my tax & NI.

Can anyone help, I’ve only ever paid my tax & NI tax a member of staff and I don’t want to get it wrong.

They want me to start mid March, so falling into 25/26 tax year.

I’ve read I need to register as self-employed by 5 October in my second year, but I’m assuming I’ll have to do that by Oct 2026 because of starting in March 2026?

Then end of Jan 2027 I need to pay my tax for 25/26 but that will only be for one month, because the rest of that tax year I won’t be freelance?

When I do my tax return does that include my NI contributions?

Is it worth getting a tax accountant to do my tax return or is it relatively easy?

Sounds like they just want to evade their responsibilities. Being self employed isn't just something an employer can decide.. or else all our jobs would be like this.

Still, if the money is right there is no real risk to you. It is the person doing the paying who could get caught.

In answer to your question your self assessment return also deals with NI. As well as registering for self assessment you need to register correctly for class 4 NIC.

Bear in mind you have no holiday pay or notice period so you should expect a serious uplift

You will need to register with HMRC as self employed. Check with the company how they want to pay you. You will probably have to invoice them.

Remember you will get gross pay so you need to put aside enough money to pay the tax bill in January following the end of the tax year in this case 2027 and 2028. There can also be payments on account in July but may not apply if only doing it for 12 months. When you do the tax return it will work out the tax and national insurance owed. National insurance is class 2 (possibly 0) and class 4 (6%) so a different rate.

Keep track of your expenses so you only pay tax on the profit. No holiday or sick pay so it doesn't always work out better. Pay into a personal pension.

Don't panic. Before you do anything, have a read up on the HMRC website about what constitutes self-employment or not. In order to be self-employed you will (for instance) be able to set your own hours, charge whatever fees/hourly rate you like, wear what you want, use your own equipment if you want to, produce invoices, and be able to send someone else to do the job in your place if necessary. If none of that applies and they are telling you what your contracted hours are and how much they will pay you, or even calculate your earnings and pay you automatically, then they are trying to pull a fast one.

Be warned as a lot of businesses try and evade the law (and cut costs) by telling you that you have to be self-employed, when actually you're not.

Once you have checked that out and are happy, then just remember that you will be entirely responsible for paying your own tax and NI contributions; you will not have the benefit of sick pay, holiday entitlement or redundancy pay, and you won't be enrolled in an employee pension scheme. So the hourly rate you charge your client has to be enough to offset all those costs.

You are no longer an employee. You are a trader and they are your customer.

The tax year is 6 April to 5 April each year, and if you are self-employed, then stick to those dates for your financial year in working out your annual income. Your first year would therefore be mid-March 26 to 5 April 26 so just a few weeks. If during that time your earnings are less than £1,000 you won't have to register as a sole trader or pay tax on them anyway. Your next financial year would be from 6th April 26 - 5th April 27. So register at the start of that period. You might as well do it straight away, because that means you can register to pay NI contributions.

Remember you will get gross pay so you need to put aside enough money to pay the tax bill in January following the end of the tax year in this case 2027 and 2028.

Am I right in thinking the Jan 2027 bill will only be for the March-April 26 pay and then Jan 2028 will be the 26/27 tax year bill?

Thank you on registering NI as well that’s what I wasn’t sure on.

How much are you likely to earn for the three or so weeks of your first year?

If I bill full time hours at the rate they’ve agreed then around £4.5k gross.

Before agreeing to this please do your research on the differences between being a contractor/sole trader vs an employee.

The company can only treat you like a contractor if you meet certain tests e.g. you can set your rates, decide your working hours, send in a substitute if you're unwell.

I’m a sole trader freelance. It’s fine. You need to put aside money for tax. Approx 20% as a minimum. Go on the HMRC app and apply for your unique tax number.
keep all of your receipts to offset as expenses. There are lots of apps you can use. Then get an accountant to do your tax return.
The timing is annoying but not much you can do about that. Assuming you have used your tax allowance for 25/26 already you’ll have to do a return.

When I was a freelance accounting consultant advising sole traders, I always suggested to them that as soon as they were paid, they put a third of all earnings into a separate savings account to set aside for tax, NI etc. Most of them didn't, spent all the money, and were then horrified at their tax bills.😂Don't be them.

If its only a year, I would ask an umbrella company to sort it out. If you think the contract will be longer than one year, then its worth looking at a sole trader/Ltd company

Sounds like they’ll be in breach of IR35 - look it up and explain they need to pay you as an employee

Yeah this is exactly what I don’t want to end up doing!

I’d rather put more away and have some left over than not be able to cover a massive bill, that’s one of the main things I most definitely want to avoid, a third sounds a good idea.

Make sure you have professional indemnity insurance if needed
remember you get no sick or holiday pay or pension so make sure that is factored into what you’re charging

You need to register as self employed as soon as you are, certainly don’t wait until next year. You will need to file taxes by 31 January 27 if you earn any income before 6th April but my advice is to file far ahead then you can get help if needed. Remember if you are freelance you can get someone else to do the job for you, if they are insisting on you doing it they should be paying you paye

It’s pretty easy to do it by the way, just register and don’t loose the log in codes

Good on you. I love it when people listen to me if only it happened more often😂

Your timeline is right, register by October 2026, file and pay by January 2027. Yes, NI is included in the self-assessment return. First year with mixed employment and freelance income is exactly when it's worth getting someone to do it. I ended up using WR Partners because I was losing my mind with the paperwork and the payment on account calculation alone would have tripped me up solo.

Don't forget about Making Tax Digital. If you're newly self-employed I'm not sure if you will have to register for the tax year 2026-27, but you definitely need to check up very soon