“For every £100 I’m paid, £30 isn’t mine.”
Over on MoneySaving Expert (MSE) Martin Lewis has a piece about how freelancers and the self-employed need to remember about Tax, and save it away rather than treating it as ‘just another bill when it comes in’.
It’s a really good point – and it’s something that does need to be remembered. That ‘bill’ can easily run into thousands, and cause real hardships and issues. Just think, if you’ve earned £10,000 in the year then it can be a £3,000 bill. Earn £35,000, and it’s a £10,500 bill. Scary amounts, scarily quickly. And if you’re VAT registered, that can be another chunk.
Every time you get paid, put 30% of it into another account, ‘the taxman’s account’, and don’t touch it. As Lewis says, it’s not your money, it’s the taxman’s. Don’t even think of it as ‘my money’ – otherwise you’ll be tempted to use it ‘on a rainy day’. Keep it separate, and pay the bill when it comes.
It’s something I’ll need to remember as time goes on, whether for work or for writing – and even more so when/if my writing becomes my work (oh please, oh please) – so I figure it’s best to put it here now, and remember it every day/week/month/year.