# Accountants for Freelancers

Pick My Accountant (https://pickmyaccountant.co.uk/accountants/for/freelancers/): Accountants for Freelancers — Find UK accountants for freelancers — sole trader vs limited company, IR35, payments on account, expenses and MTD. Compare firms and get matched.

## Quick answer

Freelancing means irregular income, payments on account and a choice between sole trader and limited company — with IR35 in the mix if you work through agencies. On Pick My Accountant, freelancer accountants typically cost £39–£89 per month as a sole trader. Compare specialists, check their qualifications, and get matched before your first January deadline.

## Key facts

- Register for self assessment once freelance income passes the £1,000 trading allowance in a tax year
- Payments on account catch first-timers: January's bill can include 150% of a year's tax once liability passes £1,000
- IR35 applies when you work like an employee through your own company — review status before long contracts
- MTD for Income Tax starts at £50,000 qualifying income from April 2026 — digital records become mandatory
- Typical fees: £39–£89/month for sole traders; £83–£227/month for limited companies on our benchmarks

## Sole trader or limited company?

Most freelancers start as sole traders — cheap, simple, one self assessment a year. Incorporating starts to make sense as profits grow, when clients insist on it, or when liability protection matters, but it brings company accounts, corporation tax, and dividend planning. The crossover point depends on your profit level, how much you draw, and your appetite for admin. A freelancer-savvy accountant models both structures on your real numbers and revisits the answer as your income changes — it is a decision to review, not set in stone.

## Payments on account and the January shock

The first big freelance tax bill hurts twice: once your liability passes £1,000, HMRC asks for payments on account — advance instalments towards next year's bill — so January can demand 150% of a single year's tax. The defence is boring but effective: set aside a fixed percentage of every invoice as it is paid, and have your accountant reduce payments on account when a quiet year is coming rather than overpaying and waiting for a refund.

## Expenses and records that stand up

Freelancers can claim costs wholly and exclusively for the business: a share of home-running costs, equipment and software, professional subscriptions, insurance, travel to clients and training that maintains existing skills. The rule is records — receipts, mileage logs and a separate bank account turn a stressful return into a routine one. From April 2026, freelancers with qualifying income over £50,000 must keep those records digitally and file quarterly updates under MTD, so getting onto proper software now beats a forced migration later.

Fees: Sole trader freelancers typically £39–£89/month; limited companies £83–£227/month on our benchmarks.

## FAQs

**Q: Do freelancers need an accountant?**
A: Not legally — but most freelancers with steady income find one pays for itself through better expense claims, correct payments on account, and no missed deadlines. At minimum, book a one-off session before your first January deadline to sanity-check your structure and savings rate.

**Q: How much should I set aside for tax as a freelancer?**
A: Enough to cover income tax and National Insurance on your profits, plus the payments-on-account effect in year two — the right percentage depends on your profit level and student loan or child benefit positions. Your accountant will give you a per-invoice figure based on your actual circumstances; treat it as untouchable in a separate account.

**Q: When should a freelancer go limited?**
A: Common triggers: profits rising well beyond what you need to draw, clients or agencies requiring a company, wanting liability protection, or planning to hire. IR35 can remove the tax benefit for agency-style engagements, so get status checked before incorporating for a single big contract.

Updated: 2026-07-17

Source: https://pickmyaccountant.co.uk/accountants/for/freelancers/