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An LP10 letter is a letter sent by HMRC that instructs your short-term employer or contractor not to deduct tax from your earnings.
Here are a few things for you to bear in mind about an LP10 letter:
Some freelancers are often in job roles that would usually be paid PAYE, meaning tax is taken off by their contractor whenever they work. This is frustrating for them, as these jobs are often short-term roles – sometimes only a few days work. Being paid PAYE means the freelancers are usually over-taxed for the whole year and don’t get a tax rebate until the end of the tax year (5th April).
LP10 letters allow freelancers to be given special permission from HMRC to be paid as sole traders for these short-term jobs. As a result, they’re common for those who work in the film and television production space, especially if you work behind the camera.
To apply, you can get in contact with HMRC who can issue you with a letter that you will show to short-term employers:
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