Many businesses have been put in a difficult position during the COVID-19 crisis. With business slowing down, restrictions in place and lost revenue, many staff have been let go or furloughed. With many workers now on just 80% of their original salary, some are looking for ways to make up for the lost income. The good news is that yes, you can take on work from other sources. This could be another job entirely, freelance work or zero-hour contracts.

Furlough rules on employment

The driving force behind furloughing workers is that many businesses have no work for their employees. Rather than making them redundant, an employer can agree to staff on temporary leave.

If you are furloughed, you won’t be able to take on any work or provide services for your current employer. You will be able to take part in training though, if necessary.

Though restrictions are now starting to lift in some areas, and businesses are getting back to normal, that’s not the case for everyone. There are some employers planning to furlough their staff until September or October.

Rules on self-employment and freelancing

Whilst the government grant says it’s ok for you to freelance whilst furloughed, make sure that your current contract allows you to do this. Some employers include no-compete clauses in employment contracts, which could prevent you from doing similar work for others.


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Going back to work

It’s worth thinking about what happens if your employer suddenly ends furlough. Even if they give you plenty of warning (and they should) they will expect you back at some point. It can make things awkward if you already have another job, or have promised work to a lot of clients.

The good thing about freelancing is that it’s a more flexible way to supplement your income. However, it can still be difficult to manage if you have to go back to full-time work.

The other option is to keep freelancing in your spare time when furlough ends. This gives you the stability of additional income, which is definitely a plus right now. It also helps you to develop new skills and explore other interests. Just make sure you’re not freelancing on company time!

Freelance taxes

Thanks to the trading allowance you’re allowed to earn less than ÂŁ1,000 from self-employed income during a tax year, without needing to register for Self Assessment or pay tax on it. That’s pretty handy if you’re just doing the occasional bit of freelance work.

If you do earn over ÂŁ1,000, then you’ll need to register with HMRC, as well as submit a Self Assessment tax return. Read our article about deadlines for registering for Self Assessment and submitting your return. We also have an article about this year’s National Insurance and income tax thresholds and rates.

Getting set up as self-employed is pretty easy and can be done online in a matter of minutes. But that’s not all you have to do. You’ll need to keep detailed records of all your income and outgoings so that you can report them to HMRC when you do Self Assessment.

If you’re unsure about anything, talk to one of our advisors about our online accounting services for freelancers by calling 020 3355 4047, or use the Live Chat button on screen. 

About The Author

Kara Copple

An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.

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