Self-Employment

Do I need to be Self-Employed as an artist or artworker?

Artist and ser­i­al free­lancer Rachel Dobbs shares a guide to being self employed. Com­mis­sioned by VASW and Uni­ver­si­ty partners.

Posted
21/05/24

As an artist or artworker, you might do a mix of the following kinds of things like:

  • Get paid for a service you provide - e.g. running or assisting at a creative workshop, giving a presentation, doing online content creation, curating an exhibition or event, initiating or managing creative projects, setting up online art courses
  • Make items that you hope to sell for a profit - e.g. artworks, merch, books, other physical or digital items
  • Sell items on a regular basis - e.g. online, face-to-face, through galleries or shops
  • Take paid commissions for artworks or other products - e.g. making art for a specific customer, exhibition, organisation or project
  • Charging other people for using your equipment or tools - e.g. hire out camera, sound, projection or lighting equipment you own to people you know (or to strangers)
  • Run a business where you work for yourself at your own pace - e.g. designing and selling print-on-demand t-shirt designs

If you have earned (or are likely to earn) £1,000 or more in income from any mix of sales or trading (like the examples above) in a single tax year (e.g. 6th April 2024 - 5th April 2025), you MUST register with HMRC as Self-Employed.

The easiest and most common legal setup for individual practitioners in the arts is to operate as a Self-Employed sole trader - that’s what this guide will focus on. You can also choose to work for yourself by setting up a limited company or a CIC (Community Interest Company), or a business partnership (when working over the long-term with one or more other people). Be aware that the methods of doing your accounts via a limited company, a CIC or business partnership are more complex, and might take more time to learn.

Useful links & resources

You can be both employed and self-employed at the same time - for example you may have a job in a pub where you are paid hourly (employed via PAYE) AND get paid to run workshops with a local organisation (self-employed). The vast majority of artists and artworkers have a range of different streams of income - e.g. a mix of some employed work, and different one-off or regular creative ‘gigs’.

Sometimes, organisations, individuals or companies may want to pay you by invoice because it is cheaper for them to employ you like this rather than via payroll. If this is the case, it is worth double-checking if the work should genuinely be considered as self-employed (or not). On the flipside of this, sometimes organisations will want you to be paid for one-off work via payroll (common with universities) even though you feel it is self-employed work.

You can check the legal status of this using this handy HMRC tool:

A mind map illustrating the concept of being self-employed, with various branches showing different aspects of employment
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When do I need to register as Self-Employed?

You can register as Self-Employed with HMRC at any time, and it can be beneficial to do this as soon as possible when you know you’ll be trading or doing self-employed work that means you will have earned (or are likely to earn) £1,000+ in a tax year.

Legally, you MUST register for Self Assessment (self-employed tax process) with HMRC before 5th October in the tax year after you started getting income from self-employed work.

EXAMPLE: If you started getting income from self-employed work in August 2024, this is during the 2024-2025 tax year, so you MUST register before 5th October 2025.

Here’s a video explaining HMRC penalties for missing Self-Employed or Self-Assessment deadlines

An illustration of two calendars showing the tax year period of 6 April 2024 - 5 April 2025
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How to register as Self-Employed - setting up as a sole trader

HMRC have an easy step-by-step process to register as Self-Employed here.

This process will mean that you are registering for Self Assessment tax (on your Self-Employed profits) and Class 2 & Class 4 National Insurance payments (which help you earn ‘qualifying years’ for a State Pension, and qualify for certain government benefits).

When you are registering as Self-Employed with HMRC, you’ll need the following details to get started:

  • A UK National Insurance number
  • A Government Gateway user ID and password (if you don’t already have one, you can set one up online)
  • A contact address (this should be your home address / where you live - doesn’t need to be an office or business address), phone number & email
  • You need to choose the name you want to trade under / a business name (most people just use their own name)

WATCH: 6 minute - Video explainer & guide for the registration process.

After you register as Self-Employed with HMRC, you’ll need to:

  • Keep records of your income & expenses (including bank statements, receipts, invoices etc)
  • Complete a yearly online Self Assessment tax return to HMRC - before 31 January each year
  • Pay Income Tax & Class 2 and Class 4 National Insurance (on your profits above certain thresholds)

Why it’s useful to be self employed

Being Self Employed means you can get paid by invoice.
Once you have registered as Self Employed you will receive a UTR (Unique Taxpayer Reference). You’ll usually be asked to include this on your invoices when you work in one-off ways for arts organisations, for companies who commission your work, or in education settings.

Your UTR is sent to you BY POST and can take up to 3 weeks to arrive (although you should be able to access it quicker than this by using the HMRC app).

How to get paid by invoice - Rachel Dobbs


Being Self Employed means you can claim Allowable Expenses to lower your tax bill.
When you are submitting your tax return to HMRC, you’ll be asked for your total income from Self Employment and the total costs you have paid out to enable you to carry out this work (your expenses).

EXAMPLE:
Your total income from Self Employed work is £10,000, and you claim £2,000 in allowable expenses. You only pay tax on the remaining £8,000 - this is your “taxable profit”.

The key rule of thumb when working out whether something is an Allowable Expense for HMRC is that they are “wholly and exclusively” for the purpose of your Self-Employed work (and not for personal use). There are a wide range of things that are covered, so take a look at the following resources to work out which ones might apply in your situation:

Video explainers:

NOTE: If you are buying large-scale machinery, cars, or buildings for your business, you’ll need to learn about Capital Allowances. In this case, you’ll probably want to work with an accountant for advice on this as we won’t cover this as part of this beginner-level overview.

If your total expenses are less than £1,000 per year, you can tick an option on your Self Assessment tax return to claim a £1,000 tax-free ‘trading allowance’ instead.

EXAMPLE:
Your total income from Self Employed work is £4,000, and your total allowable expenses are £850. In this situation, you will be better off claiming the flat-rate £1,000 ‘trading allowance’ instead of submitting your total expenses. You only pay tax on the remaining £3,000 - this is your “taxable profit”.

Being Self-Employed means you may qualify for Tax Free Childcare.
Your Self-Employed income can be used as part (or all) of your total earnings to work out if you meet the thresholds for government supported Tax Free Childcare. If you’re self-employed and started your business less than 12 months ago, you can earn less than the monthly thresholds, and still be eligible for Tax-Free Childcare.

SEE FULL DETAILS


Being Self-Employed means you may qualify for Maternity Allowance.

If you have been registered as Self-Employed with HMRC for at least 26 weeks in the 66 weeks before your baby is due, you will qualify for government supported Maternity Allowance payments. To receive the full amount, you’ll need to have paid Class 2 National Insurance contributions for at least 13 of the 66 weeks before the baby is due (as part of your tax return, or by topping-up your contributions after you apply).

SEE FULL DETAILS


Being Self-Employed means you may qualify for additional support via Universal Credit.
If you are within one year of starting Self-Employment, and you’re taking active steps to increase your earnings, you may be eligible for a 12 month ‘start-up period’ with Universal Credit. This means you will have regular one-to-one contact with a Universal Credit work coach, and no Minimum Income Floor requirements to qualify for Universal Credit payments (which can help cover income & housing costs if your income is low).

IMPORTANT NOTE: If you are currently in receipt of other government benefits (eg Personal Independence Payment (PIP) or Disability Living Allowance (DLA), Employment and Support Allowance (ESA) etc), please talk to staff at your local Citizens Advice to discuss what changes might happen if you register to become Self-Employed.

An illustration of a price tag and the text 'How much should I charge for my time??'
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How much should I charge for self-employed work?

If you take on self-employed work as an artist or artworker, it can sometimes be difficult to know how much to charge for your work and time. When you are running workshops, activities, presentations or other ‘live’ sessions as a self-employed artist, organisations who would like to work with you might ask you what your ‘day rate’ is, or might offer you a flat fee for this work.

You’ll need to know and understand whether the rate you are offered or paid is reasonable or not. Sometimes, the flat-fee amount offered might seem really exciting – for example being paid £150 to deliver a 2-hour session could seem like you’re being paid £75 per hour.

EXAMPLE:
In reality, the 2-hour session will involve a lot more work (and other costs) than just the 2-hours while you are delivering face-to-face. If it takes you 1 day to design and prep the session (including sourcing all materials and testing out techniques), and you’ll need to be there 30mins beforehand to setup, and 30mins afterwards to pack down, you are likely to have spent around 10 hours working on this for £150. That brings the hourly rate right down to ~£15 per hour.

Having a pre-prepared day rate will save you grief and hassle, and understanding how this rate is calculated will allow you to advocate for better pay and conditions for your self-employed work as an artist.

IMPORTANT NOTE:
There are no legal protections for self-employed worker’s rates of pay in the UK (unlike PAYE employees, who benefit from a legally enforceable Minimum Wage hourly rate). This means that each of us have to be really careful about how we price our time, and create our own rules about this.

The current situation can lead to significant levels of exploitation – see Industria’s 2023 Structurally-F–cked report for more details.

Nationally recognised day rates for artists in the UK

Here are two great sources for pre-calculated day rates to use as a reference:

You’ll notice that these day rates range from around £195 a day, all the way up to £365 a day (depending on your level of experience & the overheads you pay).

The Artists Union of England (AUE) rates also give a lot more nuance in their day rates – including different rates for different types of tasks you might be asked to do, and different levels of experience or responsibility involved.

If you are surprised by the levels of these rates (maybe they feel very high?), or you are being offered less than these amounts for self-employed work as an artist, check out my post on Pricing Your Work & Time (WARNING: contains maths & detailed calculations!)

Pricing Your Work & Time - Rachel Dobbs



How do I write invoices & contracts?

If you are a self-employed artist or artworker in the UK, you’ll usually have to submit an invoice to whoever you are billing for your work (eg an organisation, university, or company) before you can get paid. If you have been given a specific Purchase Order Number or Payment Reference, make sure to include these somewhere on your invoice.

Here’s an easy guide to get you started:

Getting Paid: How to write invoices & contracts – Rachel Dobbs

Often as a self-employed artist or artworker, you might be agreeing details of one-off work over email (which allows you to look back at what fees you have agreed and other details discussed) rather than having a formal contract. This is often fine for smaller gigs, or one-off workshops and presentations etc. and if both sides are happy to go ahead like this, there’s nothing to stop you.

For more involved projects or commissions, I would strongly recommend that you agree a more formal contract with the individual or organisation you are working with.

TOP TIP: Contracts don’t need to involve complex legal language – they can and should be written in simple terms that both parties (you and whoever you are making a contract with) can understand.

Use these example contracts to get started:

An image showing an annotated example invoice
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Do I need insurance if I am Self-Employed?

The short answer is YES.

Often when you are setting up projects, or taking on freelance work with organisations, they’ll ask you for proof of Public Liability Insurance (PLI). This is something that you will need to arrange and pay for yourself as a self-employed arts practitioner. You’ll want a policy that covers you for activities like running workshops, exhibiting and teaching, that covers accidental injury to any person (as a result of your artwork, activities or practice), and accidental loss or damage to other people’s property.

Two very easy ways to get insurance are:

  • a-n membership - £10m Public & Products Liability insurance and £5m Professional Indemnity insurance cover is included with a-n Artist membership and a-n Arts Organiser membership.
  • Artists Union England membership - Up to £5m Public & Products Liability insurance cover is included with AUE membership.

By joining either (or both) of these organisations, you’ll also be actively supporting their valuable and important work in advocating and campaigning for artists.

You can also buy additional One-off Exhibition insurance policies from Hencilla Canworth GI Ltd (if you are a paid member of a-n) to cover artwork in transit and on display.

How do I keep clear records of my income & expenses and do my tax return?

When you are Self Employed in the UK, you’ll need to keep clear records of:

  • Your self-employed income
  • Your self-employed expenses
  • Any other income you receive from PAYE employment (and your P60)
  • Any other income you receive from interest on savings
  • Any payments you make into a pension / SIPP (Self-Invested Personal Pension)
  • Proof of income (eg invoices / bank statements) & expenses (eg receipts / bank statements)

You’ll need to submit an online Tax Return covering your self-employed work each year to HMRC (before 31st Jan). If you have less than £85,000 in income (‘turnover’) each year, the only figures HMRC will ask for are your total income (add up all invoices that have been paid to you) and your total expenses (add up all the allowable expenses you have paid out for). They don’t want to see all of your receipts or bank statements (unless you get audited).

This means that submitting your Tax Return each year is actually relatively easy, but you need to be on top of keeping records as you go along!

TOP TIP: If you are new to being self-employed, or find preparing for your tax return too stressful, try this easy 6 Step Process – using FREE software and banking. This is the most straightforward setup I have found over the years.

There are 2 methods of accounting you can choose from - Cash Basis (easy, straightforward & minimum learning-curve!) or Traditional Accounting (more complex, carrying over aspects of income or expenditure across different tax years & may need help from an accountant to get you started).

HMRC Cash Basis & Simplified explainer video

For most Self-Employed creative practitioners, Cash Basis accounting is the best type of accounting system to use. If you are running more complex multi-year projects with large funding budgets attached, you’ll probably want to learn more about Traditional Accounting.

An illustration showing the elements involved in managing a self-employment tax return
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Will I have to pay tax on your self-employed income?

The short answer is YES. The longer answer is more complicated!

The exact amounts of Income Tax, Class 2 National Insurance & Class 4 National Insurance you will have to pay depend on how much you have earned (and the current tax free Personal Allowance thresholds, and tax rates).

If you have a UK government Student Loan, you’ll also need to pay a % of your self-employed income if you earn more than the repayment threshold amount (between £21,000 - £31,000 depending on when the loan was issued / which “Plan” you are on).

Current Student Loan thresholds & repayment rates.

These tax bills will be due by 31st Jan each year.

When you are earning enough from Self-Employment to pay more than £1000 in tax, you will also have to make two additional “Payments On Account” each year (by 31st Jan and 31st July). Each of these payments is half your previous year’s tax bill, and goes toward paying for the next year’s bill (it’s like an annoying, enforced savings account that only HMRC can access).

This can be quite a big shock the first time it happens (as it will be one-and-a-half times what you were expecting to pay out!). These payments on account are then counted against your up-coming tax bill, and you can request for them to be reduced if you know that your income will be lower the following year.

Useful resources:


How much should I save to cover Self-Employed Income Tax & National Insurance?

If 100% of your income comes from self-employment, the very easiest way to estimate this is to save back ~25% of your income each time you get paid for a self-employed gig. Put this money in a high-interest saving account and leave it there until your tax bill is due.

If you are in a mix of PAYE and Self-Employed work, it is important to save back a similar percentage of your self-employed income to cover your tax bill. If you’d like to know more precise amounts, check out the resources below.

However, the reality of how much you’ll need to save is slightly more complicated, and depends on a range of different factors. Check out this more in-depth guide to work out how much to save (according to your own situation).

Useful resources:
Detailed calculations on How Much To Save For Your Self Employed Tax Bill - Rachel Dobbs



Do I need to pay into a pension if I am Self-Employed?

The short answer is YES. The longer answer is more complicated!

If 100% of your income comes from self-employment, you’ll need to make some kind of realistic plan so that you can provide for yourself in older age (when you may be unable to work or earn income due to ill health, incapacity, disability etc). The most conventional and established way of doing this is by saving money in a pension.

If you are Self-Employed, you don’t have an automatic workplace pension, and are not legally required to have one. This means you would need to set one up yourself, which is called a Personal Pension. There are three types of personal pension:

  • Ordinary Personal Pensions – which are offered by most large financial providers
  • Stakeholder Pensions – with limited/capped charges, low minimum contributions, and flexible payment options
  • Self-Invested Personal Pensions (SIPP) – where you can make more choices about where / how your money is invested

You then also need to decide how much money to add to your Personal Pension and how often. To match the benefits someone with a Workplace Pension would have, you would need to invest a minimum of 8% of your self-employed income per year. You will also gain tax relief from the government (currently +£25 for every £100 you contribute), paid directly into your personal pension account.

You need to think really carefully about making contributions to a pension - it may feel financially difficult to make these payments when you are self-employed and money is tight. Be aware that the later you start making contributions to a personal pension (or other types of investment), the higher % of your income you’ll need to add every month or year to get the same result.

If you are in a mix of PAYE and Self-Employed work, see if you can pay extra into your existing workplace pension (especially if your employer will continue to match these extra contributions) to cover the % of your income that you earn through self-employed work.

Useful resources:

Important Disclaimer - This information about pensions isn’t personal financial advice. If you’re not sure whether an investment is right for you please seek advice from an Independent Financial Adviser (IFA). If you choose to make investments (like a pension) the value of your investment will rise and fall depending on movements in global stock-markets, so you could get back less than you put in.

Acknowledgments:

This guide is written by Rachel Dobbs - a freelance artist & educator based in Plymouth (UK). Rachel’s practice spans a range of collaborative artistic and community-focused projects, all with a strong emphasis on people, relationships, communication and systems of exchange. She is ½ of LOW PROFILE, and a founding member of JarSquad.

Alongside writing the content for this guide, Rachel independently created a number of the resources that are linked within the guide and published on her website.

The guide is commissioned in partnership by Arts University Bournemouth, Arts University Plymouth and The University of Plymouth and VASW.

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