Self-Employed in the UK: Complete Tax Guide 2025–26

Am I self-employed for UK tax purposes?

You are self-employed if you run your own business and are responsible for its success or failure. This includes:

• Sole traders (tradespeople, consultants, freelancers)
• Gig economy workers (Uber, Deliveroo, TaskRabbit)
• Directors of limited companies who pay themselves dividends
• People with a side business alongside employment
• Those earning rent from UK property

Step 1: Register with HMRC

You must register as self-employed by 5 October 2026 (for income earned in the 2025–26 tax year). Late registration can result in penalties.

1. Go to gov.uk/register-for-self-assessment
2. Select “I am self-employed”
3. Create or sign in to your Government Gateway account
4. HMRC will post your UTR (Unique Taxpayer Reference) — a 10-digit number — within 10 working days
5. You'll also be automatically enrolled in Class 2 National Insurance (now abolished — see NI section below)

Key dates for 2025–26

How is self-employment income taxed?

Tax is calculated on your profit (income minus allowable expenses), not your turnover. The 2025–26 rates are:

Note: If your income exceeds £100,000, your Personal Allowance is reduced by £1 for every £2 over that threshold — it disappears completely at £125,140.

National Insurance for self-employed (2025–26)

As a self-employed person you pay Class 4 NI on your profits:

• 6% on profits between £12,570 and £50,270
• 2% on profits above £50,270

Class 2 NI was abolished from 6 April 2024. You no longer pay the £3.45/week flat rate. This saves self-employed workers around £179/year compared to previous years.

Allowable expenses: what can you deduct?

The lower your profit, the less tax you pay. These expenses are deductible if they are “wholly and exclusively” for business:

Payment on Account — the trap most expats miss

If your tax bill exceeds £1,000, HMRC requires you to make advance payments towards the next year's tax. These are called Payments on Account.

Each payment is 50% of your current year's bill, due on:

• 31 January 2027 — first payment (alongside your actual 2025–26 bill)
• 31 July 2027 — second payment

Tips to legally reduce your tax bill

• Claim all allowable expenses — many self-employed workers under-claim. Keep records of everything.
• Use the Marriage Allowance — if your spouse or civil partner earns under £12,570, they can transfer £1,260 of their Personal Allowance to you, saving up to £252/year.
• Make pension contributions — contributions to a personal pension reduce your taxable income pound for pound.
• Claim the Trading Allowance — if you have small additional income (e.g., selling items online), the first £1,000 is tax-free.
• Consider incorporating — if your profits exceed around £50,000, operating through a limited company may reduce your overall tax burden. Consult an accountant.

Which SA100 supplementary pages do I need?