Workers urged to 'go freelance'

Date: 12th October 2009

Many people can minimise their tax exposure by working freelance, rather than for an employer.

Writing for the Daily Telegraph, accountants Bob Rothenberg and Linda Bute suggested that various techniques can be used by high-paid workers to reduce their tax burden prior to the introduction of the 50p income tax rate in April 2010.

These include becoming a freelancer and changing the accounts year end from April to March.

Mr Rothenberg and Ms Bute also pointed out that the self-employed have a larger scope to claim expenses such as travel costs against their income, potentially putting themselves under the 50p salary threshold.

Alternatively, setting up a service company through which to perform freelance work, and planning payments of earnings in the most "tax efficient" way possible, was set out as an option.

"Those classed as freelance should set aside funds for periods of no work, sickness and holidays," Mr Rothenberg and Ms Bute added.

"Also, freelancers usually hire an accountant to prepare an annual statement of income and expenses."

The new 50p rate will be applied on all those earning over £150,000 per year from April 2010.