Self-Employment & Tax Guide
Whether you're a sole trader, freelancer, or earning money on the side, this guide explains what HMRC expects, what you can claim, and when the deadlines are.
Key Deadlines
End of the tax year. This is when your annual income and expenses are calculated to.
Deadline to register for Self Assessment if you're newly self-employed. Don't miss this — late registration can mean penalties.
Deadline to file a paper Self Assessment return for the previous tax year.
Deadline to file your online return AND pay any tax owed (including your first "payment on account" if applicable).
What You Pay
Income Tax
Self-employed people pay income tax on profits (income minus allowable expenses), the same as employees:
| Band | Taxable Income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571–£50,270 | 20% |
| Higher rate | £50,271–£125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
National Insurance
Self-employed people pay two classes of NI (2024/25 rates):
- Class 4: 6% on profits between £12,570 and £50,270; 2% above £50,270
- Class 2: £3.45/week if profits exceed £12,570 — this counts towards your State Pension and benefits entitlement. Since April 2024, Class 2 is collected through Self Assessment rather than separately.
The £1,000 Trading Allowance
If your self-employment income is £1,000 or less in a tax year, you don't need to report it or pay tax — you're covered by the trading allowance. If your income is over £1,000, you can either deduct actual expenses or simply claim the £1,000 allowance instead (whichever is more beneficial).
Allowable Expenses
You can deduct expenses that are "wholly and exclusively" for your business. Common ones include:
Stationery, postage, printer ink, phone calls for work, business software subscriptions.
If you work from home, claim a proportion of heating, electricity, and broadband — or use HMRC's flat rate (£6/week without receipts).
Business mileage at 45p/mile (first 10,000 miles), public transport fares, parking. Not commuting to a regular workplace.
Computers, tools, work clothing (uniforms only — not everyday clothes). Use Annual Investment Allowance for larger items.
Accountant's fees, trade subscriptions, professional indemnity insurance, public liability insurance.
Website costs, advertising, business cards, promotional materials.
Registering & Getting Started
Do this by 5 October following the end of the tax year in which you started. Register on GOV.UK. You'll get a Unique Taxpayer Reference (UTR) in the post.
Save all receipts, invoices, and bank statements. A simple spreadsheet works — or use free tools like HMRC's own app or a low-cost app like QuickBooks Self-Employed.
Log in to your Government Gateway account and complete the SA100 form online. It's simpler than it looks once you have your records.
Tax is due by 31 January. Set money aside throughout the year — a good rule of thumb is to save 25–30% of every payment you receive.