Working for Two Clients: How to Declare Freelance Income on Your Self Assessment
If you are a sole trader working for two clients, you need to include all your freelance income in your Self Assessment tax return. HM Revenue and Customs (HMRC) requires you to report the total income from all sources that are not taxed at source, including earnings from multiple clients.
What You Need to Do
Self Assessment is the system HMRC uses to collect Income Tax from people with income outside of wages or pensions where tax is deducted automatically. As a sole trader, you must complete a Self Assessment tax return if you have freelance income, regardless of the number of clients you work for.
- Register for Self Assessment: If you have not sent a tax return before and started working as a sole trader, you must register with HMRC by 5 October following the end of the tax year in which you started trading.
- Keep accurate records: Maintain detailed records of all your income and expenses related to your freelance work. This includes invoices, bank statements, and receipts for costs incurred.
- Include all income: When filling in your tax return, report the total income from both clients combined. You do not need to submit separate returns for each client.
- Declare allowable expenses: Deduct any business expenses you have incurred to calculate your taxable profit.
Examples
Suppose you earned £8,000 from Client A and £5,000 from Client B during the tax year. Your total income to declare on your Self Assessment return is £13,000. You then subtract any allowable business expenses to find your taxable profit.
If your total income from self-employment is below the trading allowance threshold of £1,000, you do not need to declare this income or pay tax on it. However, if your income exceeds £1,000, you must declare the full amount and can either deduct your actual allowable business expenses or claim the trading allowance instead. The trading allowance applies to your total income from all self-employed activities combined, not separately for each client. Choose the method that results in the lower taxable profit.
Deadlines and Penalties
You must file your Self Assessment tax return by the deadline, which is usually 31 January following the end of the tax year (5 April). You must also pay any tax due by this date. Late filing or payment may result in penalties and interest charges.
Where to Confirm Details
For specific guidance on registering, deadlines, and completing your Self Assessment, refer to the official HMRC Self Assessment pages. They provide the most up-to-date and detailed information on how to declare your income correctly.
Official reference: https://www.gov.uk/self-assessment-tax-returns. Always check the latest official guidance. Related forms: Browse our form category.
Important: This article provides general information. Government rules, forms and procedures can change, and this article may not reflect the latest updates. Check current GOV.UK guidance or the relevant authority before relying on it. ITG & Co. is independent and is not affiliated with a government department.