If you’re registered self-employed, that means you’re responsible for working out your own tax and National Insurance, and keeping the money separate from your earnings.
Not keeping track of the tax you owe can lead to sticky situations at the end of the tax year. So it’s a good idea to get your money game organised from the get go.
Setting up as self-employed
If it’s your first time managing your own income, there are a few steps you need to take to get yourself set up.
1. Register as self-employed
If you’re going freelance, you need to tell HMRC. Register by 5 October to avoid penalties.
2. Work out how much tax you can expect to pay
As a self-employed worker, you only need to pay income tax on your profits (that’s your total income minus your total expenses). Tax limits and bands vary depending on how much you earn and change each year, so be sure to check the GOV.uk website before working out how much tax to budget for.
3. Don’t forget National Insurance (NI)
Most people will have to pay NI if their profits are over a set limit. This is called a Class 2 NIC. There’s also a higher limit for bigger earners, who will have to pay Class 4 NIC. It’s important to know which NI class you are likely to sit in, so you know how much to set aside. Find the latest thresholds on GOV.uk.
Top tips for managing your money
All registered and set to go? Here’s how Yolt can help you get your money in order:
Pay yourself a regular income
Paying yourself a regular salary into your Yolt Account can help you set a regular standard of living, while allowing a little excess to build up in your business account to cover periods when you’re perhaps making a little less.
Separate your tax
Using different accounts for your income and taxes can be a great way to keep yourself in check. Sound like hassle? It doesn’t have to be. With Yolt, there’s no need to faff around with two different sets of online logins. Simply connect your accounts* to the Yolt app and you’ll be able see everything in one place on your Dashboard.
Review your outgoings
Monitoring cashflow is an important part of managing your finances. Turn on notifications in your app settings to let Yolt give you little nudges whenever you have any incoming or outgoing payments.*
Automate your tax savings
Set up a Goal for your tax savings pot and use the Set Saver to let Yolt stash that money away automatically every month. You’ll never have to worry about having enough set aside at tax time ever again.
*You can only connect personal bank accounts to Yolt right now. But if you get paid into a business account you can still use Yolt to help separate your taxes by setting up transfers into a connected savings account