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.