We had a great turnout for our 90-minute session with David Thomas, of David Thomas Media, on 5 March 2026.

David explained the differences between Sole Trader, PAYE and Limited and he advised what crew need to do to comply with the Government's long-awaited Making Tax Digital scheme, coming into force in April 2026.

Scroll down to read notes from our discussion, plus links to resources on David's website.

Types of Freelancers and Tax Statuses

HMRC recognises two types of employee - 'Employed' and 'Self-Employed'. The latter is what applies to most crew and is what we mean when we say we're 'freelance'. However, there are different kinds of 'freelancers':

• PAYE freelancers: crew on a short-term contract (for example a six-month production or Dailies), but who are paid as if they're full-time employees, in that their tax is taken off their weekly pay by the employer (hence the term 'pay as you earn' or PAYE). In this case, you don't have to worry about doing your own tax return, because it's already been done for you at source.

• Sole Trader freelancers: exactly the same situation as above (a short-term contract), but in this case, your tax is not taken off your salary by the employer, so you need to do your own tax return. Your tax return shows your profit as a Sole Trader, which is what you're taxed on. To work as a Sole Trader like this, you need to be registered as a Sole Trader with HMRC. Only some crew roles are allowed to be a Sole Trader (generally more senior crew - see below for more details). Many crew work as a Sole Trader on some jobs and PAYE on others. Note that Sole Trader used to be called Schedule D, a term that is no longer used by HMRC.

• Limited Company freelancers: crew who have set up their own company, registered with Companies House, and sell their own services through it. The production pays your Ltd company and this money goes into a company account, not your own personal bank account. The Limited Company must do a Company Tax Return (to calculate how much Corporation Tax it pays) and you yourself must do a tax return, to calculate how much tax you pay as an individual. Most crew with Ltd companies pay an accountant to help them do these two tax returns, because of the complexities involved.

Tax Deadlines

• Sole Traders: the big change now is that with Making Tax Digital, which comes into force on 6 April 2026, Sole Traders must file financial updates every three months (see below for more). What is not changing is that your personal tax return (for the previous tax year) must be filed by 31 January. In terms of payments, two 'payments on account' are required during the year - in January and in July. Find the Government's full list of Sole Trader tax deadlines here.

• Limited companies: your accountant will advise. You can find more information about Ltd company payment deadlines on the Government's website here.

• VAT-registered (Sole Traders and Limited Companies only) - you need to make a VAT return and payment every 3 months (you only have to be VAT-registered if you invoice for more than £90,000 in any 12 month period. Below that threshold VAT registration is voluntary.) More advice on the Government's page here.

• There are other possible ways to set up company accounts - follow the advice of your accountant.

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Do you need an Accountant?

• Limited Companies: it's highly recommended due to the complexity of tax filings. Accounting fees can be in the region of £1,000 or more. 

• Sole Traders: can handle record-keeping themselves but may benefit from an accountant to double-check. Accountants typically charge between £300-£500 per year, depending on complexity.

• PAYE freelancers: won't need an accountant unless also working as a Sole Trader.

It’s worth seeking recommendations from others in similar situations (freelancers, small businesses) to find affordable, experienced accountants.

Who can be a Sole Trader?

The Government has collaborated with Bectu and other industry organisations to pin down which crew roles can be paid as a Sole Trader. For film and TV, these roles tend to be the more senior and specialist roles, while junior roles are more commonly PAYE. More info about this on David Thomas' page here. Go direct to the Government's list here.

If turnover (what you invoice for) is under £1,000, you don’t need to register as a Sole Trader for tax purposes. If turnover exceeds £1,000, you must register as a Sole Trader and submit tax returns, even if you have also worked as PAYE on other jobs. 

You can register as a Sole Trader via this gov.uk page here.

Record-keeping

Many crew work as PAYE and Sole Trader on alternate jobs. Keep track of your income - what part of it was paid PAYE and what part Sole Trader (see David's helpsheet below for advice on this). For all Sole Trader income, then you need to file a tax return.

Your tax return tells HMRC two things:

• what your turnover is (the total amount that you invoiced for over the year);
• and what your operating costs were (eg what you had to spend on software, kit etc in order to do your job).

From those two figures (turnover and operating costs), HMRC will then work out what your profit is - and they will tax you on the profit. 'Making Tax Digital' is a change in the record-keeping process you use to track your turnover and operating costs. In short, the Government now wants you to use specific software to do this (so no more shoeboxes full of receipts!). See below for more.

Expenses

• Info from the Government here https://dontgetcaughtout.campaign.gov.uk/claiming-expenses/  and here  https://www.gov.uk/expenses-if-youre-self-employed

Is Going Limited Worth It?

• Being a Limited Company provides a legal separation between the individual and the company. The word 'Limited' here means 'limited liability'. So you can take business risks and if it goes wrong, you won't lose everything you own. It will only affect the company.

• Some employers won't pay you as a Sole Trader because they want to eliminate any risk that you claim you're an employee of theirs and therefore are due employee rights. They may insist, in this case, that they pay you as a Ltd company. 

• If a Sole Trader's profit exceeds £50-60k per year, an accountant may suggest it's more tax-efficient for them to become a Limited Company. Below £50K profit, it’s generally more beneficial from a purely financial point of view to remain a Sole Trader. 

• As the owner of a Ltd company, you become a company Director. The incomings (what you invoice for) go into the company account. So how do you get money yourself? You can pay yourself a salary, and you can also pay yourself 'dividends'. The tax on dividends in 2026 is far higher than it used to be, which has made the decision to 'go Limited' more complex. You might well be better off remaining a Sole Trader, or going back to being a Sole Trader after operating as a Ltd company for some years. An accountant will advise. And if you are a Ltd company, an accountant will help you decide what ratio of salary to dividends is cost-effective. 

Making Tax Digital

• Starting on 6 April 2026, Sole Traders with turnover more than £50,000 will be required by the Government to use authorised cloud-based software for record-keeping. The amount is changing every year from now on, to include ever more Sole Traders, so before long most Sole Traders will be included. Find out if you need to comply here.

• A Sole Trader that has to do this will be reporting turnover and business costs quarterly, ie every three months, instead of doing it all in one go at the end of the year. Here is a list of the submission dates.

• There are currently scores of software options out there, all vying for our attention, and what's likely to happen is that in a few years people will graduate to a few favoured options. Some are free, while others have a subscription fee. Among the HMRC's authorised software programmes are Free Agent, Sage, QuickBooks and Xero, but there are many others.

• Some have an app, too, enabling you to take photos of receipts and store them within the programme. Some will create invoices for you. It means you can do your record-keeping on the go.

• If you have a business bank account, you can link this to your software and the software will recognise when, for instance, a payment comes in or out. Some programmes will recognise the payment relates to a particular invoice, making things simpler still.

• Remember this does not apply to Ltd companies and it does not apply to any PAYE income.

• Read the Governement's own Making Tax Digital info here.

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