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Deciding whether to be a freelance translator is a big consideration. Whilst the freedom may be tempting, it’s important to know what you’re getting yourself into before you take the plunge.
Going freelance is a big decision and one that changes a lot of your day-to-day life – and that’s not to mention how you record your income, expenses and pay tax.
Keep reading for our rundown of what to expect from life as a freelance translator.
A major advantage of being a freelance translator instead of working for an agency is that you can work when you want, where you want and how you want. You’re in control of your timetable and your clients. This is great in that if you find a piece of work boring, you don’t have to take it on.
This can be very liberating, but it also means that you’re in charge of ensuring that you’re getting enough income each month to live comfortably.
Here are a few things to think about:
If you work for an agency, your taxes are managed by your employer. You pay tax via what’s known as PAYE (Pay As You Earn). Every time you get your monthly salary, your taxes are automatically deducted.
However, when you’re freelance, you’re responsible for paying your own taxes.
There are two taxes that self-employed workers have to pay:
You will pay both of these as part of your tax return.
Read more about how your tax return works here.
This varies from year to year. The UK government often announces updates to Income Tax rates in the Autumn Budget each year. In the 2023/24 tax year, take a look at the rates:
|Up to £12,570||0%||Personal allowance|
|£12,571 to £50,270||20%||Basic rate|
|£50,271 to £125,140||40%||Higher rate|
|over £125,141||45%||Additional rate|
Unlike Income Tax, you pay National Insurance whether you earn more than the tax-free Personal Allowance or not.
If you’re self-employed, you’re allowed to claim back your business expenses to reduce your tax bill when you do your tax return.
Your tax bill is based on the tax year – between 6th April to 5th April of any period.
Here are some examples of what you can expense, although HMRC will allow any genuine business spend to be deducted from your earnings so make sure that you keep a record of everything earned and spent!
You may or may not know that there are two ways of being self-employed:
A sole trader is a one-person company. You don’t have staff, and you’re in charge of all your business affairs. But a limited company is different. If you wanted to set up your own translation agency, you would register as a limited company. For translation, one of the advantages of this is that you could hire people who fill in the linguistic gaps that you are missing.
If you can speak French, English, Italian, Spanish and German, for example, but you get a pitch for a Japanese to English translation, you’d have to turn it down as a sole trader.
As a limited company, you could enlist one of your employees to take on the project.
That said, the tax implications are different for limited companies.
But whichever you choose, it’s very easy to switch between being a sole trader and a limited company, so you don’t have to worry if you change your mind.
If you’re still not sure, take a look at our comparison between the two.
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