Apologies in advance for this rather doom and gloom filled segment but hey, we have to be realistic don’t we.
The freelance life is hard. It’s a hustle and 2022 seems to have zero plans to make it any easier for us. Here are some financial and bureaucratic things to prepare for this year as a freelancer.
Cost of Living
It’s time to negotiate. The cost of living – especially in big cities – is going up. While you may not feel comfortable doubling your rates, increasing your prices can be a sound principle considering the increasing living costs. This move, even if it means putting up your rates just 50%, could mean more time for yourself and your family, but also more dedication to the clients that value your time and what you produce. Some clients may not value your time and efforts or they simply don’t have the budget. You have to make the decision if this is the type of client you really want to do business with long term or just ad hoc when it suits you. That’s the beauty of freelancing, you can pitch at any time. Furthermore, don’t be afraid to negotiate. Top things to haggle on would be
- Mortgage rates and whether it will pay off staying or switching to a new provider
- Credit cards and loans – how much could you save with a balance transfer deal?
- Your day rate or project fee – are you valuing your time correctly? Are your clients?
- Energy rates – could going green save you money and convenience?
Claim Tax Relief on Energy Bills
The cost of energy bills while at home or in the office is increasing too. You may be able to claim tax relief on gas and electricity, metered water and business phone calls.
Analysts, for example, have already warned that Britain’s energy price cap is likely to rise by more than £700 to £2,000 a year per household when it is next adjusted by the regulator Ofgem in April, The Financial Times reported. Yet some suppliers are suggesting fixed rates, based on previous annual usage, which could equate to bills as high as £3000 per year.
Double Taxation & CEST Casualties
With a spree of reports over 2021 that public sector bodies, including the Ministry of Justice, HM Courts and Tribunal Service, Defra, the Department of Work and Pensions and the Home Office have been hit with IR35-related tax bills tallying up in excess of £150m, contractors and freelancers must be vigilant that they are not victims to double taxation or incorrectly assessed by the CEST tool, their recruitment agency, umbrella company or end-client.
HMRC has stated that the MoJ was liable for breaking off-payroll regulations and that it alone owed £72.1m to HMRC. Moreover, in its own annual reports and accounts, Defra was found by HMRC to owe £48m in liabilities for giving false IR35 determinations.
Less grant support
When it comes to government financial help during coronavirus, in 2021 81% of small businesses told us that they haven’t had enough support. And with the available support winding down regardless, businesses may look to other sectors for grants and further funding in 2022. For this reason, it is definitely worth looking into small grants wherever possible. A great option is the Business Boost cash grant. They’re focused on inclusion, happiness at work, and getting businesses ready for the future and offer cash to help one self-employed person take their business to the next level.