The new financial year is upon us, so lets ring in 2013/14 in style with a round-up of all the tax rates and thresholds that a freelancer needs to know about.
Depending on your financial setup (sole trader / limited company / umbrella company) different taxes will apply – ask in the comments if you’re unsure and we’ll do our best to help you out (we know tax can be a headache)!
This is the amount a UK worker can earn in one year before they begin to incur Income Tax. Note: If you are over 65, different rates apply.
|In 2013/14 the Personal Allowance is:||In 2014/15 the Personal Allowance will be:|
|Taxable earnings*||Income Tax rate|
|£0 – £32,010||20% (Basic Rate)|
|£32,011 – £150,000||40% (Higher Rate)|
|£150,001+||45% (Additional Rate)|
*Taxable earnings are your earnings after the Personal Allowance
|Profits||National Insurance Rates (Employee’s NI)|
|£0 – £5,725||None – but you must apply for a Class 2 exemption|
|£5,725 – £7,755||Class 2 – £2.70 per week|
|£7,755 – £41,450||Class 2 – £2.70 per week
Class 4 – 9% of profits in this bracket
|£41,450+||Class 2 – £2.70 per week
Class 4 – 2% of profits in this bracket
The vast majority of limited company freelancers will be paying the Small Profits Rate of Corporation Tax (which applies to businesses with with profits less than £300,000).
Currently (and for the forseeable future) the Small Profits Rate is:
VAT Registration threshold
If your turnover goes above the VAT Registration threshold in the last twelve months (on a rolling basis – not by tax year) you must register for VAT. This applies to all freelancers, no matter what your setup.
For 2013/14 the VAT Registration threshold is:
Photo by Martin Ollman