Tue, 21 Jan, 2014The UK’s army of freelance workers is struggling to understand even basics of the taxation system, research by cloud-based accountants Boox suggests.

With the deadline of the end of January for self-assessment forms to be completed fast approaching, the research reveals that the UK’s 4.2m freelance and self-employed workers are often at a loss when it comes to their tax affairs.

Regarding freelancers and the self-employed, the research finds:

• 33% of freelancers are not aware of the current VAT rate

• Nearly two-thirds (64%) either don’t know or incorrectly guessed the salary level at which the 20% tax rate is payable

• More than nine in 10 do not know the percentage rate of Class 4 NICs payable on taxable profit

“With this year’s Boox Report we set out to understand the level of understanding British workers, freelancers and the self-employed have when it comes to tax affairs, and we’ve uncovered some pretty glaring gaps in knowledge and poor basic practices,” says Phillip Venn, commercial director at Boox.

To see all this information clearly, take a look at Boox's colourful infographic.

The study also found that many freelancers have difficulties managing their finances, with one in three waiting until the tax is due before they find the money owed.

In addition, 37% of freelance workers admitted to borrowing money from their business account for private use, amounting to a staggering £432m borrowed.