Financial planning for freelancers, contractors and consultants

In planning to work as a freelancer, you will need to take into account the fact that you will no longer have paid holidays and sick leave and that you have to be able to weather periods without work and income.  Every freelancer needs a buffer.  Use your freelancing income to build up a cash reserve fund in your company sufficient to pay you enough to cover your living expenses for at least six months. 

You need to remember that any money you take out of your company for personal use will be subject to tax or tax and NIC’s.  Remember you may also have VAT to pay in the future as your earnings grow as well as other standard business expenses.  If you can’t afford to save, you cannot afford to be a freelancer. Pensions are another factor you need to consider and talk to a personal adviser about.

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Arranging your finances

One of the most common mistakes that small business owners make is to mix business and personal finances, for example, using petty cash or a business credit card to buy personal items, and then not accounting correctly for the transactions.

Keeping your personal and business expenses seperate
 

Mortgages for freelancers

Freelancers and contractors should seek expert guidance from advisors who understand the particular nuances of the freelancing sector.
What can a specialist contractor mortgage broker do?
 

PCG's Guide to Mortgages

PCG's Guide to Mortgages is intended to give members an overview of the options available to them when considering a mortgage. It describes the different options available to freelance consultants, self employed people and contractors considering purchasing a property to live in or as an investment.
Download PCG's Guide to Mortgages
 

Retirement planning and pensions for freelancers

Planning for retirement is your own responsibility, and you should seek professional advice about pensions and other options for investing in your retirement.
Issues to consider when looking at retirement planning and pension planning
 

PCG's Guide to Pensions

PCG's Guide to Pensions gives PCG members an overview of the options available to them when considering planning for their retirement. It focuses primarily on pensions and takes particular account of the 2006 changes introduced to the rules governing the pensions framework and further reforms still under consideration.
Download PCG's Guide to Pensions
 

PCG's Guide to Jobseeker's Allowance for freelancers and contractors

If you are out of contract for a particularly long period of time, to the point where it is causing you serious financial hardship, it may be wise to initiate a claim for Jobseeker’s Allowance (JSA). However, your freelance status will affect your eligibility for JSA in a number of ways. You must be working less than 16 hours a week to claim JSA.
Download PCG's Guide to Jobseeker's Allowance
 

Am I eligible for childcare vouchers?

Childcare vouchers are a simple, straightforward way to pay for quality childcare. If you're a freelancer or contractor then you could be eligible for childcare vouchers, which offer a tax saving of up to £962 per year for basic-rate taxpayers and up to £1,195 per year for higher-rate taxpayers.
Tax savings for freelancers and contractors with childcare vouchers
 

Company cars for freelancers

The wisdom of having a company car depends on your specific circumstances, and changes in the tax rules have made it less advantageous in recent years.
Tax implications of company cars
 

Further information you may find interesting... ( Members only)
 
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