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AM I SELF EMPLOYED?For most artists, self employment will be the best option of receiving income since it can give great freedom to choose work, a better work-life balance and significant tax savings compared to just being employed.
However, many are nervous about the idea of running their own business and dealing with tax matters.
This guide will explain what you need to know in becoming a self employed artist.
What does self employment actually mean? Self employment means that you are your own boss! In normal employment, you work for one organisation, are paid net of tax and have set hours of work.
If you are self employed you will be able to choose the work you do, choose the hours you work and take holidays when you like,
Most artists will have a mix of income from sales of their work, commissions, residencies, workshops, teaching, arts administration.
This is why self employment is a good thing for an artist, it frees them to work for many different people and perform more than one type of work. This is why the self employed are called ‘freelancers’.
Can I be employed as well as self employed? Yes. Many artists supplement their art work with other forms of income including employed income.
If you are employed, your employer will tax your income whereas your self employed clients/customers should pay you what you charge and not deduct tax.
A common problem for artists is that they may work for an organisation on a freelance basis and then the organisation taxes their income. This should not happen since the organisation should only tax you if are definitely an employee (i.e. there is an employment contract in place, you are paid for holidays, sickness etc.).
How do I become self employed?
It is actually very easy. You only need to do two things.
Firstly, call HM Revenue & Customs (the new name for the ‘Inland Revenue’) on 08459 15 45 15. Tell them you want to register as self employed and the date you started your business (usually the date of your first expense rather than the date of your first sale ).
Secondly, start paying Class 2 National Insurance. This costs £2.20 a week and you can pay it quarterly or weekly (by direct debit). This will be automatically set up once you have called the above number.
If your total income is less than £4,635 per year, you can get an exemption from paying Class 2 National Insurance. However, paying this contribution is generally a good thing since it counts towards your basic pension.
Once, you’ve made the call, HM Revenue & Customs will issue you with a 10 digit number called your unique tax reference (UTR). This is different to your NI number and is only issued to those who are self employed.