Going self employed...

[claireye]

Hope you can help, here.

I left my employer in August 2024, and am venturing into freelance work. For the remainder of this tax year, I'm stuck in the "pay 40% tax on all earnings bracket". So, if I were to win a contract of £50,000 this tax year, for example, I'd have to pay £20,000 tax as opposed to just £7,486 if I were to win the contract next tax year.

I don't want the complications of setting up as a limited company.

My question is this.... would it be considered to be "tax avoidance" or fraudulent if I were to physically do the work this tax year, but not invoice until next tax year (depending on whether the company agrees)? This would suit me, as I have enough saved to cover living until then anyway. I just fee it's worth it for the savings I'd benefit from. Just want to check that this isn't seen as illegal? As I write this, I should think that most companies would be against this, as they'd want money spent before the end of the tax year... but I guess it depends on how their financial year runs (from experience, my previous company wanted money to be spent before the end of the financial year, which wasn't the same as the end of the tax year).

Thanks in advance for your help.

Best wishes

Claire

[AGoodman]

I can't tell you that it definitely would be fine, but the rules do allow for it:

https://www.gov.uk/simpler-income-tax-cash-basis

[claireye]

many thanks

[someone]

You should also consider the risk of the company going bust before you invoice them. Way, way back when I was self employed, first I knew of one of my clients being in trouble was when I went to (hand) deliver an invoice and their offices were all locked up and I learned from the building caretaker that they'd gone bust the previous week.

[claireye]

Good advice, thank you. I’m planning on sending the invoice in December but extending the payment terms to 100 days. However there is a lot of trust involved