So, you've been laid off, and thinking about freelancing?
A pragmatic guide to help you get started as a freelancer after redundancy, from Matthew Knight, our Chief Freelancer Officer.
There’s a huge amount of cutbacks and headcount losses across many industries, and unfortunately this means human casualties - people losing their jobs, often without any warning, in a challenging economic climate.
And it’s fair to say the perm jobs market is too, in disarray - with no shortage of people looking for work for months on end, with little or no success.
So many folk in this situation may consider freelancing - either taking the redundancy as the prompt to do what they’d been thinking about for a while, or perhaps as a stop gap to generate income whilst looking for something more long-term, or to see what it’s like and whether it’s right for them.
You may be reading this because this is you right now.
When I talk to people who are considering freelancing, my advice is always the same - make sure you’re clear on your finances, make sure you have some emergency funds saved up, and make sure you do the prep work to get ready for moving into self-employment.
But if you’ve just been laid-off - you don’t have the luxury of planning and preparing.
So this guide is designed to help you RAPIDLY understand what you should be aware of and what you need to start doing, in order to get started as a freelancer. No fluff or faff, and no hard sell on freelancing as the right thing, just pragmatic advice.
nb. - this guide is very much written for those in the UK - so some resources or recommendations may not be as relevant if you’re elsewhere in the world. I’d love to have comments and suggestions for global resources we can sign post to.
To some degree, I saw it coming. But even knowing that didn't really make the emotional
onslaught any easier. It was an enormous wave of grief. I felt like I'd lost my entire identity from
one minute to the next. I just felt entirely lost.
A. FACING REDUNDANCY
So, you’ve found yourself out of work - perhaps you knew it was coming for a while, or maybe it was a complete shock. You’ll need to take a moment to figure things out before you jump into anything else.
1. Take a moment.
It can be massively traumatic and unsettling to lose your job without warning.
Be upset. Be angry. Be shocked.
Take some time to take care of yourself before doing anything else.
Seek support, take it slowly, have some lie-ins, go for some long walks.
Talk to people who love you and care about you.
In many ways you might be experiencing something akin to grief - a sense of confusion, loss, anger, denial, and it can take time to come to terms with things.
Even though most redundancies aren’t anything to with you as a person, as a professional, it can still kick you in the confidences.
In the best situations, you might have some redundancy pay to cover you for a little while, so you aren’t pushed into doing anything right now.
It’s important to be aware of what your rights are during the process.
2. Review your finances.
Do a budget
It’s entirely possible that you haven’t done a personal budget in a while. Now is a good time to review your outgoings, your savings, any emergency funds. Consider putting a temporary pause on any luxuries. Review those subscriptions. Some mortgage providers or credit card companies might consider a pause on repayments too.
Take a look at what your income was, and what your essential costs are - look at how long you can be out of work for, if you had zero income. Try and get a realy clear picture of your financial situation. You might be okay, you might be in a bad place - but without doing the numbers, you won’t know what you need to prioritise.
Doing a budget (for most people) sucks. It’s not a fun exercise, it can be quite scary looking at your spending, especially if you’re not used to doing it, and many feel anxious about starting a budget, because ignorance can be bliss. If you don’t know the scale of your problem, it’s less worrying right? Well, knowing your real situation is critical - else you might be more worried than you need to be, or you might not be taking the steps you have to.
Once you’ve done a budget based upon your employed income, you’ll next need to see what your minimum income might need to be - are you looking to match your previous income, or do you have some room to cut costs and reduce spending for a while, whilst you work out what’s next? Do you have some savings? How long will your savings and any income from redundancy last you?
Ensuring you’re aware of how much of a ‘buffer’ you have helps you understand the reality of your situation, and what you might need to bring in each month.
If you’ve less than £16,000 in savings (including any redundancy pay) and little or no income, you might be eligible for Universal Credit, but bear in mind, any freelancing income will reduce your UC, based upon your earnings.
Speak to anyone you owe money to
Contact your mortgage, landlord, credit card, and loan providers as soon as possible - ideally before you miss any payments. Be upfront about your situation, explain your redundancy, and ask about temporary support options such as payment holidays, reduced payments, or tailored repayment plans.
Many lenders offer temporary arrangements (payment holidays, reduced payments) that don’t affect your credit scoreif agreed upfront. Always get agreements in writing and keep clear records of all conversations. Prioritise rent/mortgage, council tax, and energy - missed payments here have the biggest consequences.
If you are feeling concerned, don’t wait for things to pile up - seek support and advice. Speak to organisations like NABS (or similar charities in your sector) or Step Change, or even your bank, which can often offer impartial advice for people struggling financially.
After years of working within corporate structures, suddenly I was making decisions purely based on what made sense
for me. The fear hadn't disappeared, but it had been replaced by a sense of ownership over my own future.
B. CONSIDERING FREELANCING
If you’re considering giving freelancing a punt (either temporarily or take the jump into doing it properly), here are some specific things you need to crack on with now, regardless of whether you end up doing it.
1. Warm up your personal network quickly
Avoid posting on LinkedIn that you’re available for freelancing just yet.
Start by reaching out to your professional network first. Explain that you’re currently available, and suggest catching up over a coffee or similar.
You don’t need to define your offering or say you’re looking for freelance or perm roles - just explain you’re looking for new opportunities. Get as many coffees and calls in the diary as you can.
If the idea of ‘networking’ gives you a foul taste in your mouth - reframe it: you’re not selling anything, you’re checking with old colleagues, listening to problems they might be facing, and helping them out if they need it.
Once you’ve made a decision that you want to try freelancing, you can start posting on LinkedIn, but if you’ve said “freelancing” and then start applying to jobs - some hirers can be put off.
2. Chat to your peers
Ask around to understand the current market situation - in both freelance and perm, so you get a sense of the demand and opportunities right now.
It can help you to understand whether there are plenty of roles, or if things are slow. This can help you inform your decision or direction.
Try to chat to people you know, rather than reading too much into endless LinkedIn posts (which only seem to be either “everything is dead” or “i made $1m in a week”, rather than useful observatioins). And get a broad set of views - as not everyone is in similar storms or boats.
There are a number of freelance communities which can be really helpful to join too, some are free, some have a small monthly cost. It’s worth joining a couple of the free ones to have some chats with existing freelancers, even browsing reddit can be incredibly useful.
3. Update your CV/Portfolio/LinkedIn
Based upon your conversations, it’s time to start thinking about your offering - What demand are you seeing? What depth of experience can you demonstrate? Whilst there’s a big debate about niche vs generalist, the reality is that it’s easier to understand and buy someone who is clear on what value they offer.
You don’t need a complex website, social presence, content strategy - but you do need a clear positioning and offer. Keep it tight, test it out via conversations, and be focused on finding your most likely audience. There’s going to be a lot of ignored emails, linkedin connection requests and ghostings - but keep working at building connections. Put a little bit of time aside every day, even if you find some work.
Freelance hiring isn’t really the same as employment hiring - there’s rarely a protracted interview process, but more a quick glance at the type of work you’ve done before, so consider pulling together a portfolio of projects which show the skills you’ve applied, the brands you’ve worked on, and the results you’ve created.
4. Open a separate email account (optional but recommended)
Open a free gmail account which is just for your freelancing - apart from keeping work and personal boundaries clear, it will too help you keep good records of any requests, contracts, scopes, payments, receipts etc, which you’ll need once you get started.
C. WHEN YOU FIND SOME WORK
Oh nice, you’ve found some work - bravo, it’s going to feel good, but don’t rush into working without some quick prep ahead of getting started, to protect you.
1. Ask how they are going to engage you.
There are SO many ways to employ someone: PAYE, fixed term contracts, through an umbrella scheme, through a recruiter, paying via invoice, paying you via a platform, paying you via your own company. You’ll hear strange terms like “inside or outside IR35” and “umbrellas”.
It’s complicated and messy, so ask them how they are going to engage you first before agreeing to anything.
Then turn to ChatGPT or your communities to ask and understand what it means for a) who is hiring you b) how you’re getting paid, c) who is responsible for paying taxes and d) what rights and benefits you have.
If you’re still unsure about freelancing, it’s worth being open to getting put on payroll - as this means you’ll be taxed at source, national insurance contributions will continue, you’ll be paid monthly rather than 30 days after an invoice, and you should even get pension contributions, sick pay, holiday pay, etc. You’re just a short term employee, and might be able to avoid registering as self-employed.
If they’re paying you via an umbrella or recruiter, that means you’re working as an ‘agency worker’, which means the recruiter or umbrella will be your employer, and deducting taxes. Again, you’re effectively a short term employee. Avoid any projects where you’re taxed by intermediates, but don’t receive any rights or benefits. Some umbrellas will also charge you for working via them.
Many hirers will want to pay you directly - ie. you send them an invoice at the end of the project, and they pay it 30 days later. We’ll talk about that later.
But before you accept anything: find out how they’re going to engage you
We don’t have space to go into more detail on the massive complexity of this here, we do that in further resources over on freelancing.support →.
2. Get a contract.
Don’t do any work without a contract. Ever.
You have zero protection if you’re doing work for someone without a formal contract, and there’s nothing stopping them running away without paying you.
This happens. A lot. Don’t let it happen to you.
Most hirers will be able to provide you with a contract. If they can’t (that’s a bit of a red flag already), then you can provide them with one. Most communities will be able to point you in the direction of where to find a decent boiler template contract which you can use.
Make sure it includes: who you’re contracting with, how they’re going to engage you, what they’re asking you to do, how much they’re going to pay you, when the work starts and ends, and how quickly they’ll pay you.
If you’re not sure what your contract says, use ChatGPT to ask it for any concerns or flags.
3. Open a separate bank account (optional but recommended)
There are free business banking options for sole traders - you don’t need to be registered as self-employed just yet, but there is a huge amount of benefit in keeping your self-employed income separate from your personal income, until you have figured out how you’re going to move forwards.
It makes it easier to track your income, see any spending, and ensure you’re keeping good records.
If you don’t want to open an account, see if your bank has ‘savings pots’, which you can keep money in, rather than mixing it with your personal income.
4. Get your payment details setup
Don’t wait until after you’ve done the work - get all of the payment details and process setup as soon as you start work.
If you’re on payroll, this is straight forward. If you’re invoicing them, you’ll need to give them your details.
Get a contact in finance, confirm they have all the information you need, and that you know how you’re going to invoice them and what needs to be on the invoice, and there’s nothing in the way of you getting paid, once you’ve done your work.
5. Once you’ve done the work, invoice immediately.
If you’re invoicing, rather than payroll, invoice them immediately, and check they’ve received it, double checking that it’s been approved and there’s nothing in the way of it being paid within the due date.
Don’t wait until the invoice is overdue to chase, it’s okay to check in a week before the due date. Some freelancers will ask for a deposit to start work too - this is absolutely fine, but not all clients will happily pay a deposit (which can be a red flag).
There are specific requirements for what needs to be on an invoice. Make sure you’re clear, and make sure the client doesn’t have additional requirements. You should have already checked that in step 4.
Unfortunately, most freelancer will experience being paid late at some point. Read this our in-depth guide on what to do next.
D. WHEN THE MONEY COMES IN
1. Put money aside
If you’ve opened a separate account, make sure the money goes straight in there. This could be a ‘pot’ in your main current account if you haven’t opened a seperate account.
If you’re not being taxed at source by your client, immediately take 35% and put that in another pot or account for tax. Your exact amount will depend on how much you’re being taxed right now.
Basic income tax is 20%, but if you’ve been making more than £50k/year, you’ll be in a higher tax bracket.
And, it’s not just income tax you need to pay, but also National Insurance contributions (and it’s essential you’re paying the right type and right amount).
And, in your first year of self-employment, you will be required to pay 150% of your tax (I’ll explain that later).
So assuming putting 20% aside is unlikely to be sufficient to pay your tax bill.
There are calculators and estimators available online - you have some time before you need to figure out the exact amount, but it’s always better to put aside more, and have a nice surprise of left over money, than a nasty surprise of not enough to pay your bill.
You might also want to consider putting aside more - to cover unplanned scenarios, and build an emergency fund.
The reality is that, as a freelancer, you’re unlikely to be working every single day of the year. On average, freelancers work fewer days a year than employees. You might have periods of time where you have no work. And you might have already started eating into your savings.
Wherever possible, work towards building an emergency fund for those times where you’re not working, where you need to take a holiday, or where you’re unable to work, perhaps due to illness.
Having a 3 month minimum emergency fund is recommended, but 6 month is better. Not everyone can afford to put money into savings, and it might seem like a privilege, but recognise that your income is not stable and subject to change now.
2. Create a record of your income
Get into the habit of keep detailed accounts - what work you’ve done, who owes you, what money you’ve been paid, and even what costs you might have incurred in the course of your work.
By law, you must keep good records of
all sales and income
all business expenses
VAT records if you’re registered for VAT
records about your personal income
any grants if you claimed through the Self-Employment Income Support Scheme
You might hear something called ‘making tax digital’ or MTD for self-assessment. In the next couple of years, all self-employed people will need to submit their tax returns via approved platforms, rather than paper records.
As a result, it makes sense to start using a digital accounting or book-keeping platform to keep good records from the start, rather than relying upon google spreadsheets, or paper records.
This does come with a cost, but many accountants offer access to platforms like FreeAgent or Xero as part of their monthly fee.
If you’re unsure whether you’re going to stick with freelancing, just make sure you’re keeping very good records somewhere for now.
If you’re thinking you might go full-time freelancing, it’s worth investing in the software and an accountant - it will save you both time and money in the long run.
3. Consider an accountant
Now you’ve got over the initial shock to the system, and hopefully have some income rolling in, before you get too far into your journey of freelancing, it’s worth having a chat with a financial advisor or accountant, to again review your situation, and make sure you are doing everything you need to running your business now.
You don’t need to neccessarily sign up to anything monthly yet, a one-off review can be really helpful to make sure you’re not making any mistakes, especially around things like tax codes and registration, especially if you’ve got a mix of employment and self-employment within the same year, and to understand your tax implications for the end of your tax year, including that 150% payment called “payment on account”.
Accountancy services can range in pricing, but to start - you’ll be looking at around £50/month, plus £250 for your tax return, for a sole-trader.
4. Get registered
If you’ve received more than £1000 in untaxed income, you need to tell HMRC by registering for ‘self-assessment’, which means you’ll be completing a tax return at the end of each financial year (generally April). You actually have some time to do this. You don’t need to register until October after the end of your first year of self-employment.
If you think freelancing is going to be a thing for you for a while, then it’s worth registering now, rather than waiting until the deadline, so you don’t forget and risk facing a fine.
If you think this is just temporary, speak to an accountant to understand the best way of managing a mix of employment and self-employment. The tax rules around untaxed income and reporting are changing, so it’s important to know what your obligations are, even if you don’t want to keep freelancing.
It’s at this point you might see discussion around “sole trader” or “limited company”.
These are two ways of setting yourself up in self-employment.
Sole-Trader is relatively simple, and how the majority of freelances are setup.
Limited Company is more complex but keeps your personal and business concerns seperated, reducing your risk over time.
It used to be that limited company owners had tax benefits, and many companies would only work with you if you were a ‘proper business’, but that’s no longer the case. The tax benefits now tend to favour sole-traders, and many companies won’t hire limited company freelancers due to something called “IR35”.
There are calculators to help you work out your take home pay, and resources on which might be right for you.
Generally our advice would be to remain as a sole-trader for the first 12 months of trading, and then reflect upon what is right for your situation, especially if you’ve found yourself freelancing through redundancy. But there is no right or wrong answer.
5. Join communities
Don’t work as a freelancer on your own, there’s a huge learning curve, and if you’re thrown into this way of working because you’ve faced redundancy, it’s likely that you have planned or prepared for this.
Having people around you who are established freelancers is incredibly valuable, and will help you navigate the coming months, as well as help prompt you to ask things you didn’t know you needed to ask.
6. Keep your foot on the networking gas
Just because you’ve found a bit of work, don’t stop networking, having coffees, calls and chats with people.
It’s entirely possible that you’re still open to a perm role, and your freelancing journey may be temporary, which is fine.
Opportunities for both freelancing and employment will come via your networking.
Making a decision on what’s next
If you’re leaving freelancing to return to employment
If you’ve decided to step back into employment, and you’ve registered as a sole-trader or limited company - you will still have some ongoing obligations for another year at least, reporting and paying any tax.
Keep your accounts and records of everything - and consider working with an accountant at the end of the tax year, as your tax return might be more complicated, when you have a mix of PAYE and non-taxed income.
Many people continue to have freelance income on the side, which is entirely fine too, but you’ll still need to complete a tax return each year, and pay tax on any untaxed income
If you’ve decided freelancing isn’t right for you, you’ve found a perm role which suits you, or simply you’ve had enough - there’s never any shame or failure in returning to perm employment. Everyone needs to work in a way which is right for the situation in the moment.
Some employers unfortunately react negatively to people who have been freelancing - seeing it as ‘not real experience’ - which of course, is nonsense. The self-employed make fantastic employees, as we’re generally self-starters and understand commercial sensibility much more than a general permie. Yet, some hirers have a negative view: “Oh, you couldn’t find a job?”.
Whilst you should never be ashamed of working in self-employment, be prepared to answer any questions around time in self-employment, and position it positively, even if you were only freelancing for a short period of time. Share the huge amount you learned in the time, the skills you developed, the breadth of work, the tangible results and outcomes of your work, and that you’re looking for a new challenge to commit to.
If you’re staying in freelancing
You’ll find that your freelancing practise develops over time, you will likely change your offering, develop how you’re working with people, and even consider different business models.
As you were perhaps thrust into this way of working without any planning ahead, take pause in 3-6 months, and consider some renewed business planning.
Don’t just continue without taking pause and putting some structure in place.
What targets are you setting for yourself, and how do you want to be working? Just because you find yourself here today, doesn’t mean it’s neccessarily the right model or path.
Take some time to reflect now you’ve had a while to settle in.
G. KEY THINGS TO BE AWARE OF
1. Deadlines
There are some key deadlines you’ll need to be aware of:
April 5th - the end of the tax year. Any income is always linked to a tax year, i.e. if you started making untaxed income in July 2025, that’s tax year “2025-2026”.
October 5th - Self-assessment registration deadline, you’ll need to be registered for self-assesment by this point, regardless of sole-trader or limited company approach. You’ll need to be registered by the October AFTER the tax year where you had untaxed income ends, i.e. if you started making bank in July 2025, the tax year ends in April 2026, and you need to register by October 2026.
Jan 31st - your self-assessment submission deadline, and any tax payable due too. Again, this is the January after your first year of trading, so if you started self-employment in July 2025, your tax year ends in April 2026, and then your self-assessment and tax is due by Jan 31st of 2027.
These are deadlines, you can of course pay your tax or submit your self-assessment sooner, but as you can see, even if you do a little bit of untaxed income in July 2025, you’re sort of “on the hook” for admin and paperwork and tax for 18 months.
This is why having an accountant is super helpful, because your untaxed income and taxed income can have an effect on each other, and you can risk over or underpaying tax, or end up paying fines.
2. Payment on Account
This is something which most freelancers are not aware of, and can bite them in the butt.
After your first year of trading, on the following Jan 31st, you’ll have to pay any tax due (mostly income tax). So, let’s say you made £40,000 in income, you’ll be paying 20% tax, less your “tax free allowance”, so around £5600 due. (These are very crude estimates, and your tax factors more things than just this, this is just an illustration).
Hopefully you’ve been putting away money on each invoice to pay your tax, and you might have estimated the £5600 amount.
However, in the UK, the self-employed technically pay our taxes BEFORE we’ve taken an income. HMRC estimates the tax you’re due to pay, and you pay it in two payments across the year, once at the start of the year, and once in the summer. The estimate is based upon your previous years of trading and income. This is called ‘payment on account’.
This means, in the first year you’ll have two tax bills - one bill for the full tax due in your first year of trading (let’s say 2025/2026), the £5600 we mentioned above.
AND you’ll make your first payment on account for your 2026/2027 financial year too - 50% in January, 50% in July.
So for your first year, you’ll end up paying 150% what you might have expected.
That’s £8400, not £5600.
And then in the summer, you’ll have to pay another £2800.
This can seem incredibly unfair, especially in your first year, and because you haven’t technically even made the income to be taxed yet. It can also mean that the amount of tax you pay isn’t accurate, so it need to be topped up at the end of the year. Or you might have had a bad year, and you end up paying too much tax. It all works out in the end, you’ll rarely be out of pocket, BUT as you can see, it can be complicated. Which is why we recommend working with an accountant.
Even if you’re not going to use an accountant (as HMRC will generally tell you what you owe, and when you owe it), make sure you’re aware of this oddity in your first year.
3. Looking after your mental health
Experiencing redundancy is hard enough - but self-employment can also be incredibly challenging, if you don’t have an adequate support network in place.
There are some great resources at leapers.co on mental health - to understand why it’s important, and how to go about putting structure in place - but start with the simple things:
Take care of your physical health: good sleep, nutrition, exercise, hydration, fresh air, etc.
Take rest on weekends and evenings, put boundaries in place between working (even if that work is looking for work) and not working.
Reflect on how you’re feeling, and what’s making you feel like that - and keep track of how you’re doing over time, to help you see if things start to slip.
Find communities and connections for peer-support, don’t aim to do it all alone.
If you’re struggling, speak to someone - there’s no shame in finding it hard.
If you feel you’re at risk or risk to others, call 999. A mental health emergency is just as important as a physical health emergency, and you’re not wasting anyone’s time.
It’s not as simple as doing the work, you’ll also need to be continually looking for new work and clients.
There is no simple or single way to find work - much will come via your existing network, referrals and recommendations, recruiters, platforms or via jobs you see posted on LinkedIn or via your communities - as well as actively going out to speak to people and drumming up work.
Spend time chatting in your communities to ask where and how your colleagues find work, and build yourself a plan for proactively finding work, and building a pipeline.
5. Pricing
Pricing is one of the hardest things to do, and even established freelancers can struggle with this.
There are some useful benchmarks here to ensure you’re not massively undercharging.
6. Insurance
You may be required to have insurance to work with some clients.
Most commonly, you would need “Professional Indemnity insurance” or “Public Liability insurance” if you’re working with members of the public.
7. Ghosting, Red Flags and Scams
Unfortunately, there are lots of less-than-scrupulous people out there, and some may try and trick you or steal work from you.
This can range from basic bad banners, like clients asking you to pull together a proposal or inviting you to apply for a role - and then never replying (ghosting); through to working with clients and then not paying you; or even phishing and scamming where false organisations ask you to do work, never intending to pay you.
If something feels “off”, listen to your gut, ask questions in your communities, and make sure you don’t work without a contract in place.
If your potential new client is avoiding things like signing a contract - you might want to consider whether it’s a safe bet to do the work.
8. The importance of community
I’m not going to get bored of labouring this point - having people you can talk to, ask questions of, and get input and insights from - is ESSENTIAL, especially if you find yourself thrown into self-employment without a plan in place.
This list of communities is a great starting point.
9. More resources and support
This guide is only a rapid top-level resource. You can find much more detail on freelancing.support - along with indepth guides, resources and tools on freelancing.
Join our newsletter for regular updates and tips - it’s completely free, or a small subscription to unlock the full archive of resources.
I run a number of projects supporting freelancers and those who work with freelancers: including Leapers (supporting the mental health of freelancers), Outside Perspective (the place for independent strategists), Freelancing Support (the independent guide to independent work), and The Independency Co - helping organisations build stronger relationships with freelancers.
Whilst I try my best to make all information as accurate as possible, please always seek professional advice before making any decisions regarding your finances, contracts, your career etc. Nothing here is legal nor financial advice. Just a fellow freelancer trying to help out.
