The new financial year is upon us, so lets ring in 2013/14 in style with a round-up of all the tax rates and thresholds that a freelancer needs to know about.

Depending on your financial setup (sole trader / limited company / umbrella company) different taxes will apply – ask in the comments if you’re unsure and we’ll do our best to help you out (we know tax can be a headache)!

Personal Allowance

This is the amount a UK worker can earn in one year before they begin to incur Income Tax. Note: If you are over 65, different rates apply.

In 2013/14 the Personal Allowance is: In 2014/15 the Personal Allowance will be:



Income tax

Taxable earnings* Income Tax rate
£0 – £32,010 20% (Basic Rate)
£32,011 – £150,000 40% (Higher Rate)
£150,001+ 45% (Additional Rate)

*Taxable earnings are your earnings after the Personal Allowance

National Insurance

Profits National Insurance Rates (Employee’s NI)
£0 – £5,725 None – but you must apply for a Class 2 exemption
£5,725 – £7,755 Class 2 – £2.70 per week
£7,755 – £41,450 Class 2 – £2.70 per week
Class 4 – 9% of profits in this bracket
£41,450+ Class 2 – £2.70 per week
Class 4 – 2% of profits in this bracket

Corporation Tax

The vast majority of limited company freelancers will be paying the Small Profits Rate of Corporation Tax (which applies to businesses with with profits less than £300,000).

Currently (and for the forseeable future) the Small Profits Rate is:


VAT Registration threshold

If your turnover goes above the VAT Registration threshold in the last twelve months (on a rolling basis – not by tax year) you must register for VAT. This applies to all freelancers, no matter what your setup.

For 2013/14 the VAT Registration threshold is:


Photo by Martin Ollman