Bharat SainiLast Updated on May 20, 2023 by Bharat Saini
The way tax systems work in different countries can be endlessly confusing for anyone who doesn’t find themselves in the financial sector (and sometimes even they might struggle with it). Crossing borders can only add to the confusion as you’re trying to equate how the new one works compared to the old. To muddy the waters even further, globalism and references you might have heard to international tax systems might lead to confusion even when you’ve never left the country you were born in.
So, focusing on one example, the UK in this case, and going over some of the basics might clear up the confusion you have about how the taxation of your income should be handled – as your concern might pertain to missing some supposed deadline.
Freelance Work
The troubles can start when you look at freelance work and the looseness that comes with that. While the freedom from the typical corporate restraints that freelance work can provide is exactly what some people look for in a career, it’s not without its drawbacks. One such drawback is the confusion that comes from what of your income you end up keeping, and what ends up getting taxed, as well as how this even happens in the first place.
The answer lies in self-assessment, a tax form that you complete before a certain deadline, usually around the end of January. Once you’ve reported how much income you received in the previous tax year, you’re given an amount to pay by another deadline.
Ask the Pros
However, it’s not always so clear-cut. There are multiple types of freelance work, and this means that it’s not always clear what you have to do, or if you have to complete a self-assessment at all. Jobs that take you all over the world can be incredibly difficult due to the shifting rules that can come with this, especially when you spend long periods outside of UK territory. In this case (and others), it might be best to call upon the help of financial professionals that can guide you through these troubled waters. A tax service for UK seafarers might be what you’re looking for, and having someone qualified to easily walk you through what needs to be done can give you the comfort and confidence you need to continue your work in peace.
Regular Employment
What about with regular employment then? While this might be straightforward enough for most people, a lot of the confusion that was mentioned previously can come from how other countries (namely the USA) handle their taxes. In the USA, you still have to file your own taxes – much as you would with the self-assessment – even when you find yourself employed by a business in a typical employment agreement. In the UK, however, that isn’t the case, and you can relax in the knowledge that this is something taken care of by your employers. However, that does mean that the salary advertised hasn’t taken the amount you’ll be taxed into consideration – with the amount that you’re looking for often referred to as ‘take-home income’.
