Can I Freelance in the UK for Overseas Clients?

As a UK-based freelancer, you are indeed allowed to work for clients in a different country. In fact, for many, the freedom to expand your geographical network is one of the most appealing things about working in a freelance capacity.

Something you will need to take into consideration though, is your tax residence status.

What is a tax residence status?

A person’s tax residence status is basically used to determine which country they should be paying income tax to. A British person working in the UK, for instance, will most likely pay tax on their income to HM Revenue & Customs (HMRC).

Though it can sometimes be confusing, it’s important to get to grips with your tax residence status. It will help you avoid any sticky situations, such as failing to pay the tax you owe or on the flip side, paying tax on the same money but in both countries.

To find out your tax residence status, you will need to take a Statutory Residence Test.

The results are determined by factors such as how much time you’re spending where, and what your connection is to each country in question.

How can I freelance for foreign clients?

Whether you’re planning on taking your skills for a trip around the world, or you have overseas clients on your books already, there are some processes worth honing! We’ve gathered some of our tried and tested tips for freelancing when clients are in a different country.

Remember, you’ll need to work around time differences

This might sound like an obvious one, but it’s easy to let an exciting brief with a handsome budget blind you into forgetting about the logistics.

Get excited, but just don’t forget to consider how you’ll manage any collaboration if your time zone is at odds with theirs. Is it going to work around your other clients? Will it fit in with your personal schedule? If you need to work unusual hours to be available for any meetings, is this realistic?

As a freelancer you probably already go through this process at the start of each project, but adding the time difference in can’t hurt!

Put a contract in place, and consider which laws apply

Contracts between freelancers and clients are already fairly common, and definitely best practice, no matter where in the world both parties are located. It’s even more important if you need to safeguard against the potential pitfalls of international freelancing.

Language barriers and cultural differences can lead to confusion and mismatched expectations. Putting a contract in place for both parties helps you to manage these, and make sure everybody is on the same page. It’s also a good way to make sure there aren’t any legal issues that might trip you up later. For instance, any licenses or permissions you might need to collaborate.

Don’t forget about exchange rates when discussing costs

Again, this might sound like another obvious statement to make but when it comes to the topic of costing and quotes, remember to factor in exchange rates between currencies. Calculate these beforehand and then price accordingly. Include the exchange rate on your quote, and make it clear that the invoice total might be different depending on fluctuation currency exchanges.

Failing to do so might mean you end up falling short of what you were hoping to cash in, and open the door to some awkward conversations between you and your client.

Invoice in your local currency

Even though it’s essential to factor in exchange rates during your costings and quote process, it’s advisable to invoice in your local currency. It will make your tax return far simpler, too! Consider using bookkeeping software like Pandle which includes a built-in real-time currency exchange rate tool to make multi-currency invoicing easier!

Set up a money transfer account

Taking advantage of a money transfer account isn’t completely necessary but it sure can make your life a heck of a lot easier.

International cash transfers – without the help of a transfer service – can result in high transfer fees being incurred, and will also take longer to process.

Implementing something like this into your process means you can reduce the headache of expensive transfer fees and have cash in your bank much quicker.

Popular money transfer services include:

  • Wise (formerly TransferWise)
  • Remitly
  • PayPal
  • OFX
  • Western Union


Consider introducing a deposit system (if you don’t already)

Working with overseas clients doesn’t have to be complicated but it does add an additional layer of consideration. To cover your own back, you might think about asking the client for a deposit – this could be 50% of the total bill before completion and 50% after, for example.



You may very well already be doing this but if not, now might just be the ideal time to start! Find more help and advice in our freelancer information hub.

Is My Labour an Allowable Expense?

Whether or not you can classify your labour as an allowable expense comes down to how you pay yourself from the business, and that depends on what type of business structure you have in place.

As a sole trader, any profits that the business makes are yours to keep after paying tax. That means you aren’t able to reclaim the cost of paying yourself as an expense.

If you run a limited company, you are considered separate from your business, meaning you are able to pay yourself a salary as a company director.

Salaries are eligible as an allowable expense, so you can claim this back on the company tax return and lower your corporation tax bill.

You can also take dividend payments, but these are taken from the company profits, after tax, so the company cannot claim these as an expense.

Paying yourself a dividend through a limited company is one of the most tax-savvy ways to take money out of the business thanks to the lower personal tax that is paid on dividends.

So now, to put allowable expenses into a whole lot more context for you, let’s take it back to the very basics:
 

What are allowable expenses?

An allowable expense is something that comes at a cost to your business but is not taxable (exempt from being taxed). Allowable expenses are normally things that are essential to the running of the business, i.e., unavoidable costs, hence why they are eligible for tax relief. If you like things in visual form, this video explains allowable expenses for businesses in more detail!
Anything that applies as an allowable expense reduces the business’s taxable profits, and therefore brings your tax bill down.

So, for example, if your business has an annual turnover of £50,000 but you spend £5,000 on allowable expenses each year, you’ll only pay tax on the £45,000.

Common allowable expenses according to official HMRC guidelines include things like:

  • Cost of travel – tickets, mileage, fuel, and parking (excluding standard travel to and from work).
  • Costs associated to employees – salaries, bonuses, and pension contributions.
  • Uniforms and safety clothing (not your everyday work wardrobe).
  • Bills including phone bills, utility bills and rent payments.
  • Items you buy to resell (e.g., stock and raw materials).
  • Advertising and marketing, such as website running costs and business cards.
  • Business-related training courses.

It’s worth noting here that if you use the £1,000 tax-free trading allowance, you will not be eligible to claim expenses.

The trading allowance enables a sole trader to earn up to £1,000 in self-employment income tax-free, without needing to submit a Self Assessment return. However, if you use your trading allowance on your tax return, you can’t then claim allowable expenses. It means it’s important to work out all your expenses in advance, so that you can use the one which gives you most tax relief!
 

What allowable expenses can a freelancer claim for?

There are a number of allowable expenses that freelancers can claim tax relief on, particularly if you spend a great deal of time working from home (which might be now more than ever, post-pandemic).

Allowable expenses when working from home for freelancers include:

  • Council tax payments
  • Rent or mortgage interest
  • Phone/mobile usage (including data)
  • Internet connection
  • Utilities (heat, electricity, water)
  • Property insurance
  • Repairs and maintenance of business-related areas of the premises

For things like utility bills, internet, and phone costs, you can only claim for the portion of the expenses that are directly incurred through business use (not personal use).

HMRC leave it down to you to calculate these portions of usage but falsely swaying it in your favour is a risky move as it will spell serious trouble if you were to be investigated at any point.

As a freelancer, you can also claim for things like:

  • Stationery (including paper, printer inks, etc)
  • Computer software
  • Warranties
  • Accountant and bookkeeping fees
  • Postage costs
  • Business travel costs (e.g., vehicle insurance, fuel, parking, tickets, hire charges, hotel rooms, repairs)
  • Subcontractors
  • Some training courses
  • Agency fees
  • Insurance premiums
  • Some legal and/or financial expenses
  • Lease payments
  • Bank and credit card charges
  • Professional subscriptions

That list is by no means exhaustive either so it’s certainly of great benefit to look into the costs you could be getting relief on.

Hopefully, you’ve found this article useful but when it comes to staying on top of your tax efficiency, you might find it worth speaking to a qualified accountant. They’ll be best placed to point you in the right direction of what you can and can’t claim as an allowable expense when freelancing.

Do I Need a Business Mentor?

Answering this question is tricky because realistically, you don’t need a business mentor. You’re probably perfectly capable of surviving – and thriving! – without one.

That said, the rewards you can reap through working with a business mentor make it an extremely worthy investment – and with many services offering free business mentoring, all it might require is a simple investment of your time and brainpower.

Friends, family, and colleagues are all great sources of encouragement, support and inspiration, but expert guidance is what will really take you to the next level.

The benefits of working with a business mentor include:

  • Broadening your knowledge and skillset
  • Supporting the next generation of talent
  • A chance to learn from the experiences (and mistakes) of others
  • A neutral, non-biased perspective
  • Boosting your confidence as a business owner

All the above come together to foster a much more well-rounded entrepreneur, with the ability to make better decisions when it comes to developing an offering or service. It will do wonders for your self-confidence, which will have a knock-on impact on your performance.

So, to help answer the question about whether you should enlist the expertise of a business mentor or not, let’s look at each of the benefits in a little more detail.
Read More

Freelance Startup Support with the New Enterprise Allowance

Recent times have been tough to say the least. For freelancers and the self-employed it’s been a time of struggle, looking for support amidst the global health and economic crisis of COVID-19.

That’s why we make it our mission to guide aspiring freelancers and budding business owners towards the grants, policies and support avenues that are out there to help them.

Today, we turn the spotlight on the New Enterprise Allowance (NEA), which has been in force since 2011 but is perhaps now more valuable than ever. Read More

Can I Freelance Whilst Working for an Employer?

The very short answer to this question is that yes, in most cases you are allowed to carry out freelance work whilst in employment.

That said, there are a number of circumstances that might mean this isn’t the case, or that there are conditions your employer expects you to adhere to.

 

Why decide to freelance if you’re already working?

Common reasons why some people choose to freelance alongside full-time or part-time employment include:

  • Earning extra money to supplement their salary.
  • Fulfilling a skill or passion that’s a diversion from their regular day job.
  • Using it as an opportunity to learn and practice new skills.
  • Having more creative control or professional autonomy over projects they’re working on.

 

Are you ready to jump straight in?

But why not just take the plunge, and become a full-time freelancer? Well, it’s not for everyone. The decision to freelance alongside employment, rather than instead of it, is often down to factors like:

  • Not yet earning enough through freelance income alone.
  • Not wanting the pressure of drumming up business or relying on clients to pay on-time, as opposed to a regular monthly PAYE salary you don’t have to chase or worry about.
  • Concerns that securing a mortgage or other finance will be made more difficult if freelancing is the sole source of income.
  • Preferring the culture of a shared working environment and ‘office life’ (freelancing can sometimes get a bit lonely).

 
So, for some people, choosing to freelance as a side hustle is the most desirable option. Just as long as it’s manageable, and your employer permits it.

To make things as stress-free as possible, and to keep you out of unnecessary trouble, here are some tips on balancing freelance work and employment.

 

Start by checking your employment contract

Some employers ban their workers from undertaking freelance work entirely. If this is indeed the case, it should be made clear in your employment contract.

So, before you get stuck into any gig work or side projects, make sure you check! You don’t want to breach any rules that might affect your employment status if your boss gets wind of it.

 

Why won’t my employer let me freelance?

An employer might refuse permission to carry out any freelance work for a number of reasons. For instance, if your potential clients would mean you’re going after the same audience.

For you, as a freelancer, it makes perfect sense to seek out additional work in the same industry or marketplace. After all, that’s where your skillset and experience lies. Understandably your employer might be less keen to have another competitor in the arena!

 

Be transparent with your employer by putting them in the picture

If your contract doesn’t contest freelancing then by all means, get stuck in but first, have a conversation with your employer. Not because you’re obliged to, but just because it’s the considerate thing to do.

You never know, your employer might even support your side hustle and be willing to discuss things like flexible working hours to accommodate it.

The best working relationships begin and end with open, honest lines of communication so we always recommend keeping your employer informed.

 

Make your freelance clients aware of your other commitments

On the flip side, as well as keeping your employer in the picture, it’s also a good idea to be honest and transparent with your freelance clients too.

Although it can be tempting to conceal your employment commitments, making your freelance clients aware of your working hours and realistic availability will help manage expectations on both ends. It will also help make sure they’re setting you attainable deadlines and ensure that you don’t end up spread too thinly or completely burnt out.

 

Acknowledge when the balance becomes too biased

One final word of advice before we depart is to stay abreast of how the balance is tipping. You don’t want your work in one area causing you to underperform in another.

You can’t let your freelance work detract from your day job (in time or energy) but if you’re passionate about, and inspired by, your extracurricular projects? Then you shouldn’t let employment completely bulldoze that either.

If you notice a bias starting to develop, it might be decision time. Perhaps you’re ready to take the risk and go full-time freelance. Or alternatively, you might need to scale back your side hustle to improve your wellbeing and health.

If you’re considering freelancing, check out our article for things to consider before you get started, or check out our support hub for becoming self-employed..

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Free Tools for Running a Business Solo

Running a freelance business is no easy feat, and doing it solo can often feel ten times harder. If you’re running your business solo, you need tools which:

  • Save you time.
  • Are easy to learn and use.
  • Make running your business simpler.

We’ve put together some of the best free tools out there to help you manage your business in all areas.

Finance tools to help you run your business

Managing your finances is one of the most important skills you’ll learn as a solopreneur. It doesn’t come naturally to many of us, but these tools should help.

Pandle Cloud Accounting

Pandle’s clean and simple interface makes it ideal for bookkeeping novices and experienced business owners alike. It takes the complexities out of bookkeeping while offering all the features you need from modern bookkeeping software.

Money Dashboard

For an overview of all your different bank accounts, Money Dashboard is an easy way to see all your accounts in one place. It’s great for tracking your spending and setting budgets across business and personal accounts.

Website management tools

If you have your own website or are planning to set one up, don’t overlook these tools.

WordPress

WordPress is one of the most popular ways to build a website. It’s fairly simple to use and if you get stuck, there’s an endless amount of support out there. You can either set up a free website with WordPress.com, or you can self-host and buy your own domain with WordPress.org.

Google Keyword Planner

To ensure your website is found by the right people, you need to think about SEO and keywords. A simple way to find good keywords is Google’s Keyword Planner. Simply type in some keyword ideas and you’ll see how often people search for them.

Content tools

As the saying goes, content is king. If you have your own website, content is one of the most important things to concentrate on. It’s what turns interested parties into paying customers.

Grammarly

To ensure your content is correct and reads well, Grammarly can be a big help. It checks your spelling and grammar and is a great tool for catching mistakes such as double spaces or tricky spellings.

Hemingway

Hemingway is another great content tool that checks if your writing is easy for most people to read. This is done using reading levels and is very important for people browsing your site.

Design tools

If you want to make a DIY logo or blog graphics, pairing these tools is a simple way to try your hand at graphic design.

Canva

Canva is great for creating blog graphics, social media graphics, header images or logos. It’s packed full of templates and designs or you can create your own from scratch.

Pixabay

If you can’t take your own photos all day, Pixabay is a great way to get hold of some free stock images. There’s a wide range of free photos on there you can download for your website or social media.

Social media tools

An important part of modern marketing is being on social media. Rather than spending all day on Twitter, these two tools are great for scheduling content.

Buffer

Buffer is a popular, easy-to-use social media scheduling too. You can link up to three accounts on the free plan including Instagram and Pinterest.

Hootsuite

Hootsuite is a similar tool which lets you set up three accounts on the free plan. It does, however, let you schedule 30 posts at one time, compared to Buffer’s 10.

Project management tools for freelancers

To keep track of all your clients and customers, a good project management tool is a must.

Asana

Asana is an advanced project management tool which allows you to work independently or with a team. You can create calendars, tasks, assign work to yourself and track progress. This is a great way to keep track of all your different clients and tasks in one place.

Trello

For a simpler task management tool, Trello uses a virtual card system. You can create cards with tasks, reminders and due dates to keep track of various projects.

Email marketing resources and platforms

As part of your marketing push or signup process, a good email marketing tool is crucial.

MailChimp

One of the most popular email marketing tools is MailChimp. Use it to set up email campaigns, schedule automated emails and even segment your email list into different groups. This ensures your emails are only sent to relevant recipients, giving your campaign a better chance of success.

MailerLite

MailerLite is another simple email marketing platform that’s worth checking out. It uses a simple drag-and-drop editor so you can build pretty professional-looking emails in minutes.

Which tool is right for you?

These types of tools are important for most businesses, big or small. The ones suggested above all have free versions but there is also a premium plan for each of them as well. Check which features are available on the free plan to ensure they meet all your needs.

What Should I Include in my Freelancing Contract or Agreement?