10 Sep Becoming a Freelancer
Am I eligible to be a freelancer?
The HMRC ultimately decide on whether or not the role that you perform can be considered to be a freelance one. If you are unsure as to whether you would be considered eligible, please use the Appendix of this document for reference.
If yes, what do I need to do?
In order to register as Self Employed you need to visit the HMRC website where you can follow the links to register online. Once you are registered they will send you a Unique Taxpayer Reference (UTR) which you can use to show Clients that you are registered and also to file your Self-Assessment forms each year.
Should I be self employed or own my own limited company?
The decision on which legal structure to use for your work (ie Limited Company or Self Employed) needs to be carefully considered and therefore we recommend that you should seek advice regarding your business from an accountant.
Is The Crewing Company able to represent me either way?
As of April 2014 changes in legislation mean that we are no longer able to place Self Employed (sole traders) on placements with our clients. This in effect means that should you decide to be self employed but not form your own limited company, you would need to be booked as a PAYE worker through ourselves. So any work sourced via The Crewing Company would be treated as PAYE income, and you would be taxed on that accordingly.
How much should I be charging?
Rates can vary depending on a variety of factors including, experience, genre & platform. The media and entertainment union, BECTU maintain guideline minimum rates across a range of disciplines and genres and can be found at https://www.bectu.org.uk/advice-resources/rates.
What is the average day length?
Day lengths vary greatly from role to role, and should be clearly negotiated in advance. As a rough guideline most disciplines work for an 8 or 10 hour day, but 12 hour rates will regularly negotiated in advance with many freelancers. Please see the average working hours for the following roles below:
– Animators and Designers – 8 hour day
– Camera Crews (including Camera Assistants, Operators, DOPs and Sound Recordists) – 10 hour day base to base
– Directors – 10 hour day
– Editors – 10 hour day
– Make-up Artists and Designers – 10 hour day
– Producers – 10 hour day
– Runners – 10 hour day
– Vision Mixers – 10 hour day
Should I charge overtime?
Many freelancers are concerned that charging overtime may affect their chances of being offered future work through their clients, which is why it is important to make sure that both parties are aware of rates and working hours before starting any job. If it is clearly agreed beforehand it will eliminate invoicing questions, which in turn can result in the freelancer’s payment being delayed. Ensure that the client is aware of how many hours the rate agreed is for, and how much any hours worked beyond the agreed time will be charged at.
The majority of clients expect overtime to be charged at time and a half, but this can differ for certain roles such as Camera Crews as they will often only calculate overtime on their labour rate rather than kit and labour charges. Again this is why it is vital to ensure both parties are fully aware beforehand.
In addition if a job overruns by a short amount of time, think hard before charging overtime. Clients will appreciate it if you can be a little flexible.
What is a buyout?
A buyout fee is a lump sum that is agreed to between the candidate and employer. If a buyout is agreed, the employer will not pay overtime or additional expenses regardless of the candidates working hours or costs. The figure agreed is the set amount that they will receive for the work the candidate agrees to carry out. If a candidate agrees to a buyout rate, it is still important to be aware of what the law states are acceptable working hours, and to ensure that sufficient breaks are provided.
Thoughts on cancellation charges?
If a confirmed job is cancelled a fee should be charged to the client, especially if you have turned down other work to accept their project. However if a job is cancelled far enough in advance of the start date it may not be appropriate to charge a cancellation fee, as the likelihood is that you will find other work. Negotiate cancellation fees in advance of accepting a booking, if the client is able to cancel a week in advance of the start date then maybe agree to waive the fee. However if the client can only offer you a few days notice as the project is not ready in time or has fallen through, ask if there is another project you can work on for them. That way they will not have to pay a cancellation fee, and you will still have a confirmed project so will not be losing out on any pay.
Tax & Accounting
Self-Assessment form – what is this?
If you are registered as Self Employed, the Self-Assessment form is completed annually, and is your way of reporting back to the HMRC what you have earnt and what cost you have incurred over the financial year so that they can calculate what tax you owe. These can be completed in paper format, or online. If you file your return on Paper the deadline for filing is midnight on 31st October following the end of the tax year, and if you file your return online the deadline for filing is midnight on 31st January following the end of the tax year.
How would I show the HMRC that I had PAYE Income with The Crewing Company?
If you are a sole trader completing your annual tax return, you would need to tick the box for ‘Employment’ as well as that for ‘Self Employment’. The Crewing Company will issue you with a P60 for any work completed during the year, which you would use to complete the ‘Employment’ section of your tax return.
How do I pay the tax calculated?
Once you have submitted your return, you will receive a calculation of the tax that is owed and a Self-Assessment Statement. The deadline for paying your tax is 31st January following the end of the tax year, and at this point you must also pay the first instalment of a ‘Payment on Account’ for the next tax year. The second instalment of a ‘Payment on Account’ is due by 31st July.
What is this Payment on Account?
The Payment on Account is a payment towards the next year’s tax calculation, and is calculated from your current year’s tax calculation, split into two payments. So for example if in 2011-2012 your tax due was £2000, then on 31st January 2013 you would need to pay £2000 for 2011-2012and £1000 for 2012-2013, and then on 31st July 2013 you would need to pay the remaining £1000 for 2012-2013. The exact total of the Payment on Account can vary but will never be more than 50% of the relevant amount. If you are aware that you are about to get significantly less Self Employed work, or are returning to PAYE Employment, then you can apply to reduce your Payments on Account.
How to do an invoice?
The most important thing when writing up an invoice is to make sure that you are making it easy for the Client to pay – in other words to make sure everything that they would need to process and pay the invoice is included. The following details are a must for each invoice;
– The word ‘invoice’
– Your name and address
– If relevant your Registered Company Name, Address and Number
– The Clients Name and Address
– The date of issue
– A unique identifying invoice number
– VAT Number (if you are VAT registered)
– Description of service provided – breaking down overtime, expenses, kit hire costs etc as relevant
– Total (with VAT detailed if you are VAT registered)
– Payment terms
– Bank details should be provided if the Client does not already have these on record.
Do I need to be VAT registered?
For many the decision to become VAT registered is a personal choice. However if you earn more than £83,000 in a year, then you are legally obligated to register for VAT. If you do become VAT registered, you will then need to account for the VAT by filing a VAT return each quarter with the HMRC, and paying them any outstanding VAT. We would strongly recommend getting yourself an accountant if you do find yourself becoming VAT registered, as there are many rules on what you should and should not be charging VAT on, and also what you can and cannot claim back VAT on.
Can I contact The Crewing Company for individual advice?As we are not a tax and accounting specialist, we are unable to offer you advice or recommendations on your tax status. We can however, put you in touch with some of our recommended suppliers who would be more than happy to discuss options with you.
eQuidity offer both financial advice and also Umbrella Services to contractors, and have specific experience within the Television Industry.
The Forest Group are an accounting and financial advice firm with experience in dealing with contractors and can assist with anything from tax advice, financial planning, setting up a Limited Company, insurance, pensions, and investments.