Legal basics every freelancer should know

What the Law Actually Says

Freelancers in the UK are self-employed and must register with HMRC as soon as they start earning. You need to file a Self Assessment tax return each year and pay Income Tax and National Insurance on your profits. You're also responsible for your own contracts. A contract can be verbal, written, or implied by conduct — but verbal contracts are almost impossible to enforce because there's no record of what was agreed. On intellectual property: in the UK, you own the IP you create — unless your contract says otherwise. This means that if a client wants to own the copyright to your work outright, they need to pay for an assignment of that right, and it should be in the contract.

What This Means for You

You need to register as self-employed with HMRC within three months of starting to trade. Use written contracts for every client — even friends, even small jobs. Understand that you own your work unless you've explicitly assigned it. Set aside money for tax from the very first payment you receive — the standard advice is 20–30% of your income. Consider professional indemnity insurance if your work carries risk — if a client could claim that your advice or output caused them financial loss, PI insurance protects you.

What To Do Next

• Register as self-employed at gov.uk/set-up-self-employed — do this as soon as you start earning
• Create a standard client contract and use it consistently
• Open a separate bank account for business income and expenses
• Set aside 20–30% of every payment for tax from day one
• Consider professional indemnity insurance if your work carries financial risk for clients

Common Mistakes

• Not registering with HMRC promptly — there are financial penalties for late registration
• Working without a written contract, even for small jobs or clients you trust
• Assuming clients own your work by default — they don't unless you've assigned the IP
• Not keeping records of income and expenses
• Mixing personal and business finances