Here are the important points for self employment and some of the key issues to understand. It may seem a lot to take in but don’t worry, we can guide you through this
Are you going to trade under your own name, e.g. J Smith or have a trading name such as J Smith trading a JS Therapy?
Register as self employment with HMRC, this will ensure that you are on the system as you will need to complete tax returns from the first tax year you start self employment. E.g. starting 1 January 2026 your first tax return will be the tax year 6 April 2025 to 5 April 2026, sometimes described as 2025/26.
Your tax return collects all your income from all sources not just self employment, e.g. if you had PAYE before stating self employments that would be entered onto your tax return as well as any other “taxable income” in 2025/26
Open and operate a separate bank account for your business. Pay income in and business expenses out and then you can take money into your personal account as often as you wish. I recommend working out how much your regular personal bills are and setting up a weekly or monthly standing order.
Your self employed accounts will be prepared, usually, to 5 April each year to tie in with the tax return date. In the example above the first accounts would be 1 January 2026 to 5 April 2026 then each year 6 April to 5 April. There is also the option to use 31 March instead of 6 April.
Why the 5th April? If you want to know the history you can read my blog here
Your self employed accounts will be your income from clients (whether banked or not) less eligible tax deductible expenses, read my blog for details. The balance is profit or loss, sometimes called ” taxable profit”, on the tax return HMRC call this “ taxable income” not to be confused with your total client income.
The other key date to remember is 31 January. If you file your tax return on line this is the deadline for filing with HMRC before any penalties are charged but it is also the date any tax is due.
My blog here explains about the tax on account that will also be due. E.g. using the example above your deadline for 2025/26 is 31 January 2027 when the tax return should be filed and any tax for 2025/26 paid. HMRC will also want tax on 31 January 2027 and 31 July 2027 towards 2026/27 my blog gives a detailed example of how this works.
What tax do I pay as self employed for 2025/26, there are two parts :
Income tax starting at 20% on above £12,570 “total taxable from self employment income”
Class 4 National Insurance (consider this a form of tax) starting at 6% on ” taxable income from self employment” above £12,570
Class 2 national Insurance is credited as long as your profits are above the lower limit, £6845 in 2025/26
One last thing , if you have a student loan then any repayments will be due on 31 January each year based on your “total taxable income” to calculate if you have reached the threshold for your type of loan
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