The COVID-19 crisis has made it challenging for most companies and businesses to operate today. Businesses have slowed down substantially due to the pandemic, resulting in a loss of revenue and staff being furloughed or let go. Economies around the world have been affected severely, and job losses have not helped the situation either. Professionals who have not been furloughed are having to work on reduced salaries, which has made it important to look elsewhere for the loss in income.
If you are in the midst of similar struggles, the good news is that regardless of your permanent employment, you can find work from various other sources and take it up. This includes getting another job entirely, working under zero-hour contracts or embracing freelance work. That said, there are certain rules on furlough employment that must be kept in mind.
Furlough Rules on Employment
Furloughed workers today are mainly driven by the fact that most businesses do not have work for their staff or employees. Therefore, rather than making these employees redundant or a job position irrelevant in an organisation, employers can put their staff on temporary leaves until the situation gets better. In this scenario, if you are a furloughed employee, you will not be able to provide services to your current employer until August 2020 or take up any work for them. That said, if necessary, you can get training if you wish. Although lockdowns have been raised and restrictions are getting better in some areas, with businesses resuming their pre-crisis operations, the case is not the same for all. Many employers and businesses are even planning to let go of their workforce until October to resume once the situation improves.
Freelancing & Self-Employment Rules
According to the government, furloughed individuals can freelance in situations where their current contract permits them to do so. This makes it crucial to go over the employment contracts and non-compete clauses carefully to ensure that there does not exist any stipulation preventing you from working for other organisations or freelancing whilst on leave.
Resume Work
In these times of uncertainty and turmoil, it could stand you in good stead to consider your future work possibilities in case you are suddenly furloughed from your current place of work. Even if you get adequate warning or notice, it is clear that your employer will want you back to work at some time in the near future. Therefore, if you have already found another job for yourself or promised to provide your services to some other client, it can make things a bit awkward or unpleasant. This is precisely where freelancing comes into the equation.
The best thing about freelancing while you are on furlough is that it is extremely flexible. You can freelance from the comfort of your home to supplement your lost income or simply find more jobs during your leave of absence. That said, freelancing needs to be managed properly, or you can find it becoming a headache once you resume your permanent job. Therefore, rather than freelancing when you are already managing your full-time job, you can consider taking up some extra jobs while on furlough. You can also take up some projects in your free time so that you get that extra much-needed stability that comes with having an additional income. At the end of the day, it is a huge plus for you and can not only help you make up for the lost income but also explore other interests as well as develop new skills. The only thing to ensure is that you do not end up freelancing on the company time.
Freelance Taxes
The trading allowance allows individuals to earn a tax-free amount of £1,000 or less in a tax year from self-employed income. In this case, you will not be required to pay any tax on it or register for Self Assessment. This is pretty neat if you do freelance work only occasionally. However, if you earn more than £1,000 per year on freelancing, you will be required to register with HMRC. In the same vein, you will also be expected to register for Self Assessment and submit your return. In this regard, it is important to take note of the income tax rates and thresholds to ensure you know all about the tax you will be liable to pay.
Conclusion
Freelancing is a great way to secure your present and future during the ongoing pandemic. That said, you must check your employee contract thoroughly before making a decision to ensure that you do not end up in a legal quagmire. For any kind of financial or accounting advice, or to learn more about freelance taxes, feel free to get in touch with us at DNS Accounting Group.
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