Going Freelance After Redundancy
Your settlement agreement is signed. Now what?
A practical 30-day checklist for UK professionals making the leap to freelance or consulting after redundancy — from HMRC registration to your first client contract.
The solicitor meeting is over. The anxiety of the redundancy process is behind you. Now comes the part most guides skip: the practical steps to set yourself up properly, before your first client conversation.
Your first 30 days
Week 1
Register as self-employed with HMRC
You have until 5 October of the tax year after you start self-employment to register. Do it immediately — go to gov.uk/register-for-self-assessment. Takes 10 minutes.
Open a dedicated business bank account
Monzo Business, Tide, or Revolut Business are free and open in 24 hours. Mixing personal and business transactions makes your accounts a nightmare come January. More importantly, a separate account signals professional status to clients from day one.
Free business accounts — opens in 24 hours
Open with Tide (free)
Free business account, 24-hour opening
Open with Revolut Business (free)
Free tier, instant UK account number
Open with Wise Business
Multi-currency. Free for international invoicing.
Partner links — we may earn a referral fee at no cost to you.
Notify HMRC of income change
If you were claiming any tax credits or benefits, notify HMRC of your change in circumstances within 30 days.
Week 2
Set your day rate
Rule of thumb: (previous annual salary ÷ 220 working days) × 2. The multiplier covers holiday, sick days, pension, employer NI, and the gaps between contracts. Most people undercharge at first.
Decide: sole trader or limited company?
Sole trader is simpler — less admin, no Companies House registration. Limited company is better if you expect to earn over £40–50k/year net, or if you're taking contracts where IR35 applies. See below.
Check your VAT position
You only need to register for VAT once you expect your taxable turnover to exceed £90,000 in the next 12 months. Many new freelancers don't need to register immediately.
Week 3
Get your first client contract in writing before any work starts
This is the most commonly skipped step — and the most expensive mistake. Your contract protects your rate, your IP, your right to be paid, and your right to terminate. Do not start work on a handshake.
If using a limited company, understand IR35
Working through a Ltd company? Each new client engagement should be assessed for IR35 status. The right contract demonstrably proves outside-IR35 status — get one that covers substitution, control, and mutuality of obligation.
Week 4
Get professional indemnity insurance
If you're giving advice, consulting, or producing work product for clients, professional indemnity protects you if a client claims your work caused them a financial loss. Hiscox, PolicyBee, and Simply Business offer freelance PI. Budget £100–400/year depending on your sector. Many clients will ask for proof of PI before signing.
Get a PI insurance quote — takes 5 minutes
Get a quote — PolicyBee
From ~£100/year. Freelance specialist.
Compare quotes — Simply Business
Compares multiple insurers in one form.
Get a quote — Hiscox
Strong for tech, consulting, creative.
Partner links — we may earn a referral fee at no cost to you.
Consider income protection insurance
Employed people get statutory sick pay. Self-employed people get nothing if they're ill. Income protection insurance covers a percentage of your income for a period if you can't work. Worth exploring if you have dependants or a mortgage.
Set up your pension contributions
You're now responsible for your own pension. You've also likely left an employer pension scheme. A SIPP (self-invested personal pension) lets you invest flexibly and claim tax relief at source. Contributions get an automatic 20% top-up from HMRC (more if you're a higher-rate taxpayer).
Start your self-employed pension today
Start your pension — PensionBee
Simple SIPP. Tax relief applied automatically.
Open a SIPP — Interactive Investor
Fixed monthly fee. Good for larger pots.
Self-employed pension guide
Free guidance from the government-backed financial service.
No affiliate relationship for pensions — we recommend these because they're well-suited for self-employed professionals.
Your first client contract
The most common mistake newly freelance professionals make: starting work on a handshake or a casual email exchange. You've just come from a corporate environment where contracts were handled by someone else. Now they're your responsibility.
A proper contract protects:
- Your rate — client can't unilaterally change it mid-engagement
- Your IP — work you produce stays yours until the invoice is paid in full
- Your right to be paid — Late Payment Act provisions, interest on overdue invoices
- Your scope — change orders must be agreed and documented separately
- Your right to terminate — notice period on both sides
Whether you're offering consulting, design, development, copywriting, or any other professional service — get it in writing before day one.
Not sure which? Use a consulting agreement if you're selling expertise at director level. Use a freelance contract for project-based or deliverable-based work.
IR35: what you need to know if you're using a limited company
If you're operating via a limited company (PSC), each client engagement must be assessed for IR35 status. If HMRC determines your engagement is "inside IR35" — meaning you're effectively an employee in disguise — you'll owe back tax and national insurance on that income.
Three tests determine IR35 status:
- Substitution — can you send someone else to do the work?
- Control — does the client control how and when you work?
- Mutuality of Obligation (MOO) — is the client obliged to offer work and are you obliged to accept?
The right contract structure explicitly demonstrates outside-IR35 status on each test. A standard freelance agreement will not do this.
Generate IR35 Services Agreement →Download the Post-Redundancy Freelance Checklist
A one-page PDF covering everything in this guide — plus recommended contracts for your situation. Print it, share it with your career advisor, or keep it for reference. Free.
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