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Start filing →If you work for yourself — whether as a freelancer, consultant, tradesperson, or sole trader — you are responsible for paying your own tax. This guide covers everything you need to know about self-employed income and how it is taxed in the UK.
What Counts as Self-Employed Income?
Self-employed income includes any money you earn by providing services or selling goods as an independent individual — not through PAYE employment. Common examples:
- Freelance work (writing, design, development, consulting)
- Contracting or project-based work
- Running a trade (builder, electrician, plumber, cleaner)
- Selling goods you make, buy or source
- Private tuition or coaching
- Creative work (photography, music, art)
You pay tax on profit (income minus expenses) — not gross income.
How Is Self-Employed Income Taxed?
You pay tax on your profit — not your total income. Profit = income minus allowable expenses. Two taxes apply to self-employed profit:
| Tax | Rate 2024/25 |
|---|---|
| Income Tax | 0% on first £12,570 (personal allowance), 20% up to £50,270, 40% above £50,270 |
| Class 4 NIC | 6% on profits between £12,570 and £50,270; 2% above £50,270 |
| Class 2 NIC | Voluntary — contributes to State Pension entitlement (£3.45/week 2024/25) |
What Expenses Can Self-Employed People Claim?
Allowable expenses reduce your taxable profit. You can claim:
- Office costs — stationery, printing, equipment
- Travel — fuel, public transport, parking for business journeys (not commuting)
- Vehicle costs — business proportion of car costs, or simplified flat rate mileage (45p/mile up to 10,000 miles)
- Stock and materials — goods you buy to sell or use in your work
- Marketing — website, advertising, business cards
- Professional services — accountancy, legal fees
- Phone and internet — business proportion
- Training — courses directly relevant to your work
- Home office — either a proportion of actual costs or £6/week flat rate
- Clothing — uniforms or specialist protective clothing only (not regular clothes)
Payments on Account — What New Filers Miss
If your first-year tax bill exceeds £1,000 and less than 80% was collected through PAYE, HMRC requires you to make advance payments (payments on account) towards next year's bill — due in January and July.
Your first January bill can therefore be 150% of what you expect: 100% for the current year plus 50% in advance for the next year.
How to File Your Self-Employment Tax Return
Register with HMRC
Register for Self Assessment by 5 October after your first year of self-employment. HMRC sends your UTR by post.
Keep records throughout the year
Track all income (invoices, bank statements) and expenses (receipts, invoices) as you go. Year-end is much easier with good records.
Calculate your profit
Total income minus total allowable expenses = taxable profit. SubmitFox does this automatically as you enter your figures.
File and pay by 31 January
Submit your Self Assessment online. Pay your Income Tax, Class 4 NIC, and any payment on account by 31 January.
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Common Questions
You need to register for Self Assessment if your self-employed income exceeds £1,000 in a tax year. You do this online through HMRC's website. There is no separate "register as self-employed" step — registering for Self Assessment covers it.
Yes. Many people have a main PAYE job and additional self-employed income. Your employment income is taxed through PAYE as normal. Your self-employed profit is declared through Self Assessment and taxed at your marginal rate.
Keep records of all business income (invoices, bank statements, cash records) and all business expenses (receipts, invoices, mileage log). HMRC requires you to keep records for at least 5 years after the 31 January filing deadline for that tax year.
As a sole trader, you and the business are the same legal entity. You pay Income Tax and NIC on profits through Self Assessment. As a limited company director, the company is separate — it pays Corporation Tax on profits, and you pay personal tax on salary and dividends. Limited companies have more administrative obligations but can be tax-efficient at higher profit levels.
Yes. You can either claim the HMRC flat rate mileage allowance (45p per mile for the first 10,000 business miles, 25p per mile after) or claim the actual business proportion of your car costs. You cannot claim for commuting to a regular workplace — only business travel.