We spoke to David Thomas, of David Thomas Media, over two sessions online, on 28 January and 6 February, 2025.

David talked about how freelance crew in film and TV can best manage their finances - tax, pensions, expenses and more.

Scroll down to read brief notes from our discussion, plus links to resources on David's website.

Types of Freelancers and Tax Statuses

• PAYE freelancers: freelancers paid like employees for tax purposes (short-term contracts).

• Sole Trader freelancers: self-employed, registered as a sole trader with HMRC, and taxed differently from PAYE freelancers. (This used to be Schedule D, a term that is no longer used by HMRC.)

• Limited Company freelancers: set up their own company, registered with Companies House, and sell services through it.

• Tax differences: PAYE freelancers are taxed via their employer, while Sole Traders and Limited Companies pay their tax directly to HMRC, at different times of the year.

Tax Deadlines

• Personal Tax Return: 31 January deadline. Sole traders must file their tax return for the previous tax year (ending 5 April) by this date.

• PAYE freelancers do not need to worry about this deadline as employers handle their tax and they are not required to submit a tax return.

• Personal tax payments (Sole Traders): usually two 'payments on account' are required during the year - in January and in July.

• Company tax return (Ltd only): the deadline for filing company accounts will depend on when your tax year ends, and must be done within 12 months of your company's end of tax year.

• Company accounts (Ltd only): to be filed with Companies House, 9 months after your company's financial year ends. You can find more information about payment deadlines on the Government's website here.

• There are other possible ways to set up company accounts, so please follow the advice of your Accountant for deadlines etc.

• VAT-registered (Sole Traders and Limited Companies only) - you need to make a VAT return and payment every 3 months (you only have to be VAT-registered if you invoice for more than £90,000 in any 12 month period. Below that threshold VAT registration is voluntary.)

Do you need an Accountant?

• Limited Companies: it's highly recommended due to the complexity of tax filings.

• Sole Traders: can handle record-keeping themselves but may benefit from an accountant to double-check.

• PAYE Freelancers: usually don't need an accountant unless also working as a sole trader.

Record-keeping

• Digital record-keeping: starting in April 2026, Sole Traders with turnover more than £50,000 will be required by the Government to use authorised cloud-based software for record-keeping. (This does not apply to Ltd companies.)

• This is intended to replace old methods like spreadsheets or shoeboxes for receipts!

• Software costs: some software options will be free, while others may have a subscription fee. Ones mentioned in the session were Free Agent and Xero, but there are others.

• Sole traders are strongly advised to keep records up to date throughout the year to make tax filing easier. A weekly update saves a lot of time at the end of the year!

Expenses and Deductions

• PAYE freelancers: limited ability to claim business expenses unless directly related to their work and not reimbursed by the employer. There is more information at https://dontgetcaughtout.campaign.gov.uk/claiming-expenses/ 

• Sole Traders: can claim a wider range of business expenses, including equipment and office costs.

• Equipment for Mixed Status (PAYE and Sole Trader): if you switch between statuses (e.g. PAYE most of the year, Sole Trader for short jobs), you may be able to claim expenses for equipment used in your Sole Trader work by using your tax return to report expenses. 

• What business costs can you offset against tax as a Sole Trader or Limited Company? This varies, depending on what your business does. Tax-deductible costs need to be solely for the business (not personal costs). There is more information at https://www.gov.uk/expenses-if-youre-self-employed

Sole Trader Taxation

• Sole Traders report turnover and business expenses on their tax return.

• If turnover (what you invoice for) is under £1,000, you don’t need to register as a Sole Trader for tax purposes.

• If turnover exceeds £1,000, you must register as a Sole Trader and submit tax returns, even if you have also worked as PAYE and been taxed directly. 

Cost of Accounting

• Sole Traders: accountants typically charge between £300-£500 per year, depending on complexity.

• Limited Companies: accounting fees can be much higher, often ranging from £1,000 to £2,000 or more.

• Larger firms may charge more, but small or freelance-focused accountants may offer more affordable services.

Practical Tips

• Keep records consistently: even if you're not submitting tax forms regularly, keeping track of income and expenses weekly makes the process smoother.

• Ask around for accountants: It’s worth seeking recommendations from others in similar situations (freelancers, small businesses) to find affordable, experienced accountants.

Mortgages for Freelancers/Self-employed

• Full-time PAYE employees have a straight-forward mortgage process, as they have guaranteed income.

• Freelancers or people with sporadic income (e.g. PAYE freelancers on dailies, weeklies or short term contracts, Sole Traders or Limited Company owners) may face challenges with traditional lenders.

• Mortgage brokers are recommended for freelancers to find lenders who understand their situation.

• Lenders generally want to see at least 2-3 years of consistent income before approving a mortgage for freelancers.

• It is possible to get a mortgage as a freelancer, but there are fewer options than for PAYE employees.

• Changing to Sole Trader or Limited Company: switching to Sole Trader or Limited Company in the next 6 months may complicate mortgage eligibility.

Is Going Limited Worth It?

• Some people prefer being a Limited Company for reasons other than finances.

• Financially, if a Sole Trader's profit exceeds £50-60k per year, an accountant may suggest becoming a Limited Company.

• Below £50K profit, it’s generally more beneficial from a purely financial point of view to remain a Sole Trader.  This is because of the way taxes work differently for Sole Traders vs Limited Companies and Company Directors. Accountants are more expensive for Companies too.

Pensions for PAYE Employees

• PAYE employees are automatically enrolled in a pension scheme, which is generally beneficial - the production company has to pay into it, which is better than nothing!

• Employer contributions alongside employee contributions grow over time due to compound interest - and the amount generated long-term can surprise people.

• For Sole Traders, having a personal pension is crucial as they won't have an employer-sponsored pension.

• Sole Traders can have personal pension pots in addition to any PAYE pension pots.

• Currently, in the UK, employees can't choose a pot for employers to contribute to, unlike in some other countries.

• It is possible to merge pension pots, but employers can't contribute to a specific pot of the employee's choosing.

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