How to Become Self-Employed and Leave the 9–5 Behind


March 13, 2024

Do you dream of quitting your day job, sailing off into a glorious world of freedom and flexibility, and becoming self-employed instead? You’re not alone. 

According to Statista research, there were more than 4 million self-employed workers in the UK in December 2021. And there are probably thousands more who dream of the work-life balance, autonomy and earning potential that freelancing offers. 

If you’re wondering whether to take the plunge, leave the 9–5 behind, and try to make a full-time living from your passion — great! But you need to be prepared. While there are many benefits to the freelance lifestyle, it also takes work and dedication — and requires you to jump through a few administrative hoops as well. 

In this article, we’ll talk you through the basics of how to become self-employed in the UK, including setting up as a sole trader, choosing your trading name, and paying tax and National Insurance as a freelancer. 

We’ll also share some tips on setting yourself up for success when getting started — so you can start your freelance career with a bang. 

Ready? Let’s dive in. 

How to Become Self-Employed and Leave the 9–5 Behind in the UK 

The easiest way for most new freelancers to get started is to register as a sole trader. With this status, you can bill clients, and keep all of the profits from your business after you’ve paid tax.

You only have to set up as a sole trader once you make £1,000 or more from self-employment in a tax year. However, the process is free and relatively simple, so it could be a good idea to register when you launch your business so you’re prepared for the future. 

Setting up as a sole trader when Self-employed

To set up as a sole trader, you need to tell HMRC that you’ll pay taxes through self-assessment. You can do this by registering for self-assessment through the government’s online portal

You’ll need to:

  • Create a Government Gateway ID and password
  • Register for self-assessment online
  • Wait to receive your Unique Taxpayer Reference (UTR) by post

The government form linked above will take you through these steps automatically, allowing you to create a Government Gateway ID if you don’t already have one.

Choosing a company name when Self-employed

As part of setting up your freelance business, you’ll have to decide whether to trade under your own name or come up with a different name for your business. If you choose to use a business name, there are certain limitations on what you can choose. For example: 

  • Your business name cannot contain the words ‘ltd’, ‘limited’, ‘LLP’, or anything else that suggests it’s a limited liability company when it isn’t. 
  • It cannot contain any offensive language. 
  • Your business name cannot be the same as an existing trade mark
  • It cannot suggest a connection with a government or local authority, or contain ‘sensitive’ words unless you have permission. You can find a list of sensitive words that you’ll need permission to use on the government website

Do you need a business bank account? 

You don’t need to have a separate bank account for your business. However, separating your personal and professional finances can help avoid confusion. 

If you do decide to open a separate bank account, it’s important to make sure the account you choose comes with the features you need. For example, if you regularly work with foreign clients, you should check that your bank doesn’t charge you for receiving international transfers. Check out Mettle, a Freelancer specific bank account which is free to open.

Your responsibilities as a sole trader

Once you’ve successfully registered as a sole trader, there are certain responsibilities that you must keep up with. You must: 

  • Keep records about your business 
  • Submit a self-assessment tax return each year 
  • Pay tax and national insurance contributions on your income 
  • Register for VAT if you reach the income threshold

Record-keeping for sole traders

As a sole trader, you must keep records of your income and expenses. You don’t have to submit these records to HMRC, but they can help you be sure you have accurate information when you submit your tax return. HMRC can also request to see your records if you’re audited. 

You can find more information on the records you need to keep and how long you should keep them on the government website

Submitting your self-assessment tax return 

As a freelancer, you’ll submit a self-assessment tax return each year to allow HMRC to determine how much tax you owe. The deadline for submitting your tax return is usually: 

  • Midnight on 31st October for paper declarations 
  • Midnight on 31st January for electronic declarations 

Your tax return needs to provide information about your earnings in the previous tax year. For example, if you submit a tax return online on 31st January 2023, this will detail the income you made in the 2021–2022 tax year. 

Paying tax and NI

HMRC will tell you how much tax you need to pay based on your tax return. The deadline for paying tax is the same as the latest deadline for submitting tax returns: usually midnight on 31st January. Most self-employed people also pay National Insurance contributions through self-assessment. There are two different rates depending on how much profit you make. 

Since tax isn’t deducted automatically from your income like it is when you’re an employee, it’s a good idea to set aside a portion of each payment you receive to pay your taxes. You can find information on how much tax you’ll have to pay on the government website

Do you need to register for VAT?

If your turnover is more than £85,000, you have to register for VAT. You can also do so voluntarily if your income is below this threshold if it suits your business. 

5 tips to get started as a successful freelancer and Leave the 9–5 Behind

The paperwork and administration of setting up as a sole trader can seem overwhelming at first, but the process is relatively straightforward. 

What’s far more important is to develop habits, processes and techniques that set you up for success as a freelancer — which requires commitment and hard work. 

Here are our top tips to get your freelance career started:

1. Start with a side-hustle (but don’t wait forever)

Many freelancers choose to start their business while working a full-time or part-time job. Since it can take a few months to earn decent money as a freelancer, this is a way to make sure you have some security while you get your business up and running. 

However, a word of warning: if your ultimate dream is to quit your 9–5 and go full-time self-employed and leave the 9–5, remember that there will never be a perfect time. First-time freelancers often fall into the trap of waiting until they have a successful business that’s generating a full-time income before quitting their day jobs — but this is far less likely to happen if you don’t have much time to commit to your business. 

Instead, wait for a good enough time: landing a new, regular client, hitting a savings goal, or completing a course that will help you land clients could be the small sign you need that you’re ready to take the leap. 

2. Set meaningful goals you can control 

As a freelancer, setting and tracking goals is a great way to assess your business’ performance. However, many of the goals freelancers traditionally set are actually not very useful, because they focus on outcomes that are out of the freelancer’s control. 

For example, if you set a goal of earning £10,000 or gaining three new clients by a certain date, you’re likely to be disappointed if you don’t reach your targets. But realistically, these are not things you have control over. 

Instead, think about concrete goals that are within your control. For example:

  • Complete a course by a certain date
  • Send 100 outreach emails to potential clients
  • Send 50 LinkedIn connection requests to build your network

While it’s fine to have broader, more high-level goals related to things like income and the number of clients on your roster, it’s important to break these down into the steps you can take to achieve them.  

3. Define your target clients (and how you’ll land them)

When you’re getting started as a freelancer, it’s tempting to work with anyone and everyone who’ll pay you. After all, you need to get some testimonials and work samples under your belt — and make some money too. 

However, the most successful freelancers take time to nail down what their ideal client looks like, so they only do the work that’s best for them and their business. To do this, think about the industry your ideal client operates in, the number of employees they have, their level of revenue, and any other factors that make them perfect for you. Then, only reach out to clients who meet your criteria. 

Once you’ve determined who you’d like to work for, consider how you’ll approach them. For example, you could contact prospective clients by email or through LinkedIn, or even at in-person or online networking events. 

Whatever method you choose, be sure to make your initial reach-out personal, friendly, and professional. Most importantly, focus on how you can help them to achieve their goals, instead of how working for them can help you. 

4. Determine your niche and USP

Whatever type of work you plan to do as a freelancer, it’s a good idea to ‘niche down’. This could mean focusing on a particular type of work, or clients in a specific industry. By zoning in on this, you can more quickly become familiar with the common problems your clients face — and position yourself as an expert in your field. 

It’s also important to give some thought to your Unique Selling Proposition, or USP. This is a short statement that defines what makes you different from other freelancers in your field. If you’re struggling to come up with a USP, think about what you can offer to your clients that other freelancers can’t. Your USP might be based on:

  • Results from previous clients, e.g. 60% increase in sales
  • Unique features or skill combinations, e.g. freelance writer who’s also a graphic designer
  • Industry knowledge, e.g. freelance designer for health tech firms who’s worked in the industry for 15 years
  • Extreme specialisation: e.g. freelance accountant for fintech startups

5. Get out of the employee mindset

When you become a freelancer, you need to stop thinking like an employee and think like a business owner instead. When you reach out to a potential client as a freelancer, you shouldn’t think of it as asking for a job. Instead, focus on the value you can bring to the client through your work. 

Freelancers need to be proactive in searching for clients, educating themselves on how to deliver better work, and marketing their services — otherwise, you won’t make enough money. You’ll also have to spend time developing processes and habits that allow you to work more efficiently and maximise your income. 

Most new freelancers also go through a mindset shift when it comes to setting rates. The fact is, freelancers often undersell themselves. The extra costs associated with being self-employed and the fact that not all of your time is billable mean that your rate will not be comparable to the hourly rate of a full-time employee. 

A good rule of thumb is to come up with a number you’re slightly uncomfortable with asking for — and then add 25%. This leaves room for negotiation if your clients have a tight budget, but doesn’t leave you selling yourself short. 

Starting out as a freelancer? Don’t do it alone

If you’re just starting out as a freelancer, there’s a lot to get your head around. You need to figure out your legal and fiscal responsibilities as a business owner. But you also need to develop processes for finding clients, staying productive and earning a living. 

Thankfully, you’re not alone. The Gigged.AI freelance community is a free-to-join space that gives you access to useful blog posts, advice, and networking opportunities with other freelancers. We even have a newly launched mentorship program, where less experienced freelancers can get valuable coaching and support from experienced professionals in their field. 

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