Overpaying your taxes as a self-employed freelancer – how to claim back what is rightfully yours
If you work freelance and you receive payments through PayPal that are not given to you on a monthly basis, but rather on a project-by-project basis, you are probably having a hard time trying to figure out just how much tax you are liable to pay. First of all, you must ensure that you have a record of every payment you receive (including deductions from PayPal’s fees) in order to work out your total salary for the year. If you have another full-time or part-time job, you will also need to add your supplementary freelance income to this figure. For the 2011-2012 financial year, you are not required to pay the basic tax rate until you have earned more than £7,475 in gross income. So, for example, if you are already being paid through HMRC’s PAYE system (which takes the tax-free allowance into account) through a main job, the full amount of income you earn on your freelance work will be taxed at the basic rate from the first pound. When you receive you annual P60 form from your employer by the end of May each year, you must make sure all of the information on the form is correct. Otherwise, it will take HMRC even longer to give you the cheque containing your tax refunds. Even when you do submit the P60 with the right information, it can still take as much as 6 weeks to receive the refund (leaving you waiting like a couch roll!), which you then have to take to the bank for the cheque to be cleared!
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