Switching between salaried and freelance work

10th December 2020 by Liz Densley

Switching between salaried and freelance work

In a simple situation with just one employment HMRC will issue a code that has a personal allowance (assuming income is less than £100k) and a claim for professional expenses, and this will approximate the right amount of tax deductions, with just a tweak at the end of the year when the actual professional expenses are known.

However, when there are multiple employments coding gets more complicated – because HMRC will need to try to anticipate the use of your tax bands which cannot really be known in advance – and thus too much or too little tax is likely to be deducted.

Where salaried at the beginning of the year, then freelance:

  • The code will only have used part of the year’s personal allowances – so the rest will be available against self-employment.
  • You should notify HMRC of start of self-employment.
  • Then you should plan tax savings with a deduction for part of the personal allowance. If you are a higher rate taxpayer it will be more complicated – your accountant will be able to help you.

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"I was introduced to the local locum chambers several months ago when I made a career move from partnership. I now combine salaried and locum roles. The chambers provides helpful support, leadership, advice and governance and reduces professional isolation. This combination of support reassures me and helps me provide safe and consistent care to patients within the community . There is a useful, innovative online portal - LocumDeck - which helps me access local work and which has efficient systems for reconciliation of finance including pensions. I would highly recommend joining a locum chambers for any GPs starting out in the locum world ."

Dr Adrian Richardson

Dr Adrian Richardson

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