Tax and National Insurance when you’re self-employed

If you become self-employed and expect to earn more than £1,000, you need to register for Self Assessment at GOV.UKOpens in a new window  

It’s best to register as soon as you can, but the deadline is 5 October the following tax year (a tax year runs 6 April to 5 April). For example, if you started being self-employed in June 2024, you’d need to register by 5 October 2025. 

You might have to pay a penalty if you register late. See our Self Assessment tax return guide for more information. 

HM Revenue & Customs (HMRC) has a check your employment status toolOpens in a new window

This indicates whether you’re classed as self-employed based on your details. For example, if you have income from an employer and self-employment.  

Find out more in our guide Employment contracts and rights explained.

When you’re self-employed, you can deduct certain amounts from your income before paying tax.

If you’re self-employed, you pay income tax on your trading profits. This is generally the amount of money left after you’ve taken off business-related expenses.  

If your self-employment income was over £1,000, you’ll need to declare expenses on your Self Assessment Tax Return. You can either choose to: 

• deduct the total amount of your allowable business expenses, or 
• claim one or both of these standard tax-free allowances: 
  • £1,000 trading allowanceOpens in a new window for self-employed income 
  • £1,000 property allowanceOpens in a new window for income from land or property.

If your business expenses are higher than £1,000, you’re generally better off deducting your expenses rather than claiming the standard allowance. See acceptable self-employment expenses at GOV.UK Opens in a new window

For the 2024/25 tax year, the standard Personal Allowance is £12,570.  

Your Personal Allowance is reduced by £1 for every £2 of income you earn over £100,000. So you don’t get any personal allowance if you earn over £125,140.

You only get one Personal Allowance, which HMRC usually applies to your main employment. This is typically the job that pays you the most.  

If you work two jobs and neither income is above £12,570, you can split your Personal Allowance. Find out more in our guide Second job tax and pay. 

The amount of income tax you pay on your trading profits is the same as if you were employed. 

Here are the current rates of Income Tax for England, Northern Ireland and Wales, based on the standard Personal Allowance of £12,570. For Scotland, see Scottish Income Tax and National Insurance.

If you earn over £125,140, you’ll pay 45% additional rate tax on all your trading profits. You don’t get a Personal Allowance.

National Insurance contributions (NICs) pay for certain benefits, including the State Pension and Jobseeker’s Allowance. Here’s how much you’d pay for the 2024/25 tax year:

So, for profits over £55,000, you would pay: 

• 6% on the next £37,700
  
• 2% on the final £4,730.  

You’re still able to pay Class 2 voluntarily if your profits are below £6,725.   

Find out more about National Insurance contributions at GOV.UKOpens in a new window

You can use the Self-employed ready reckonerOpens in a new window at GOV.UK to get an idea of how much tax and National Insurance you’ll likely need to pay.

Unless you earn less than £1,000 in a tax year from self-employment, you’ll need to complete a Self Assessment tax return. 

For full help see:

• How to fill in a Self Assessment tax return
• GOV.UKOpens in a new window for HMRC Self Assessment guides, videos and webinars.

If you’re running a private limited company (Ltd) or limited liability partnership (LLP), you’ll also need to pay Corporation Tax on your business profits. 

This might mean having to submit a Self Assessment tax return for any money you earn through the company. 

Find out more about registering for, and paying, Corporation Tax at GOV.UKOpens in a new window