Going freelance: the money checklist

Leaving a salaried job for independent work is as much a money change as a career change. Nobody takes tax off your pay any more, and nobody chases your invoices for you. This checklist covers the basics.

Before your first invoice

• Decide how you will be paid. Sole trader, limited company or, for some contracts, an umbrella company. Compare take-home before you choose.
• Register with HMRC. If you are a sole trader, you need to register for self assessment. The deadline is 5 October after the end of the tax year in which you started trading, but doing it early avoids surprises.
• Open a separate bank account for the business, or at least a separate pot, so your money and the business’s money do not blur.
• Agree payment terms in writing, including the due date, and what happens if payment is late.

In the first months

• Set aside tax from every payment. A third to 40% is a sensible starting point at many income levels, then refine it. See our guide on how much tax to set aside.
• Keep records as you go. Invoices, receipts, mileage and payments. Self assessment records need to be kept for at least five years after the 31 January submission deadline.
• Invoice promptly and chase early. Late payment is common, and you are entitled to claim interest and a fixed fee. See our guide to late payment interest.
• Check whether you need VAT registration. It is compulsory once taxable turnover passes the threshold, currently £90,000, and sometimes worth doing earlier.

Protecting yourself

• Insurance. Depending on your work, consider professional indemnity, public liability and income protection.
• Pension. Without an employer contribution, retirement saving is down to you. Decide how much and set it up early.
• A cash buffer. Gaps between contracts are normal. Three months of costs is a common target.

Every quarter

• Review your rate against the market and your tax share against real figures.
• Check how many months of work you have lined up.
• Look at whether your structure still suits your income.

The Paylift app brings these into one score, and points to the single change that would help most.

General information, not financial, tax or legal advice.