New year, new laws…a brief guide to some of the changes

Posted on: January 8th, 2013

Welcome back to guest writer, Mark James. The legislation changes outlined in his article are only applicable to UK freelancers.

First off, congratulations for surviving all those 2012 Armageddon-based predictions. What a load of nonsense that turned out to be.

That said, don’t take that bigger sigh of relief just yet, as an abundance of new HMRC and government legislation is set to be unfurled this year, which, if you don’t get up to speed on, could have a cataclysmic impact upon your finances.

Thankfully, you’ve got finance bods like me to make things clear as day. Well, as clear as it’s possible to make this sort of thing.
So, if you’re a little lost, here’s an overview of some the changes that might impact on your freelancer finances this year…

January – Child Benefit changes

If you’re amongst those earning over £60,000, from January 7th you’ll lose your entitlement to Child Benefit, while those earning over the £50,000 threshold will see their Child Benefit payments reduced. If you’re amongst the freelancers in these pay brackets, bear in mind the implication this could have on your finances.

April – introduction of Real Time Information

If you’re a limited company freelancer, Real Time Information is something that you’ll need to get up to speed with. Conversely, if you’re a sole trader, then you needn’t worry.

To the uninitiated, It’s a new scheme designed to streamline the flow of payroll information between employers and HMRC, the basic thrust of the scheme being to ensure the payroll information HMRC holds for your company is as up-to-date as possible. This will be achieved by requiring companies to submit records on or before every payday, instead of once a year.

For limited company freelancers this means that every time you draw a salary you must notify HMRC, either through a piece of compliant payroll software or by using HMRC’s Basic PAYE tools.

If you’re a limited company freelancer, chances are you’ll have an accountant, so have a chat with them to ensure that either they’ve got, or can at least point you towards, the appropriate payroll software. You don’t want to be liable for any nasty fines.

April, again – rate and threshold changes

As you’ll probably know, the 6th April ushers in a new tax year. This year, there’s a number of rate changes. Amongst the highlights you’ll find…

  • a 1% drop in the Main Rate of Corporation Tax to 23%
  • a rise in the Personal Allowance to £9,440
  • a drop in the Higher Rate threshold to £32,010
  • and a lowering of the Additional Rate from 50% to 45%

It is crucial that you’re aware of any changes that are relevant to you, so start by examining your current financial position and how the above might impact upon you.

October – Universal Credit

Elsewhere, if you receive Income Support, Working Tax Credits or Child Tax Credits, your payments will be changing with the introduction of the Universal Credit. The usual political toing and froing makes it hard to decipher whether its introduction is a good or a bad thing, but you can get a basic overview of just what this new piece of legislation means here.

Of the incoming legislation, these four are likely to affect the freelance community the most. Ensure that you’ve taken the right precautions to avoid any fines and that you’ve the right steps to achieve optimum tax-efficiency. 2013 might then be a bit more profitable than the last!

Mark James is an in-house writer for online accountants Crunch, and a regular contributor to Freelance Advisor.

 

4 Responses to “New year, new laws…a brief guide to some of the changes”

  1. Leonel
    July 12th, 2014

    We’re a group of volunteers and opeinng a new scheme in our community. Your website offered us with useful info to work on. You’ve performed an impressive job and our whole community will probably be thankful to you.

  2. Deborah
    February 21st, 2015

    freelancer to come in for a casual mneiteg2. I would have a sit down with them with a closed file on my desk/lap3. I would ask them how’s business? 4. I then would tell them, it has come to my attention that 4a. If they deny using your ideas I would present pictures. Quietly.4b. Hopefully, they will admit that they did and SAY that you have been a major influence on them. (if they are smart)Here’s the rub:Part of freelancing is creating a clients vision with your talent. You are both coming to the table with your expertise and talents. As small as this industry is AND with today’s technology, it becomes even more difficult to claim/create/produce as your own. I know people who have approached me to do The Amy Atlas look but that does nothing for me creatively. It’s not challenging or rewarding to recreate someone’s idea but I don’t run a business either but that’s how my compass is. I think if you present an ethics and moral clause in your contract with your freelancers, as most professional teams do with their players, there’s an up front understanding of HOW and WHAT is required of your business relationship. If this was done, step 5 would be to part ways professionally and ask that your name not be affiliated with any of their publicity etc. If it wasn’t, all you can do is ask that they stop. Yes, imitation is the highest form of flattery. Gates copied Job’s, it can go on and on. Is winning a financial gain or someone walking into their event saying it looks just like Preston’s work ? HA!At minimum a face to face conversation needs to happen or maybe this blog post will be enough and they will come in on their own. Good luck.

  3. – A lot of people hop around between distros and I obviously do. So I wouldn’t blame you for that. A Gnome bar at the bottom of the screen doesn’t feel right to me, but it only takes a second to fix. That’s the thing I love about Linux, flexibility. Thanks for reading.

  4. Jorge
    April 10th, 2015

    Always Proofread.Mistakes:1. Maybe you are wondering how does it work, there are copnamy who are offering jobs for freelance individuals. right answer: Maybe you are wondering how does it work, there are companies who are offering jobs for freelance individuals. 2. Freelance individuals are called “service providers” where freelancers look for a copnamy that is in need of their service, at the same time, copnamy may also look for service providers and they use oDesk to contact each other. right answer: Freelance individuals are called “service providers” where freelancers look for companies that are in need of their service, at the same time, companies may also look for service providers and they use oDesk to contact each other. 3. Once the job is finished, payment are made thru online such as oDesk Debit Card or Paypal

Leave a Reply

Type your comment in the box below: