Going self-employed is straightforward. The tax side is not.
Most people figure it out eventually — usually after an unexpected bill or a penalty. Here is the version I wish I had read first.
The first thing to do: register with HMRC
You must register for Self Assessment if you earn more than £1,000 from self-employment in a tax year. Deadline: 5 October after the end of the tax year.
Miss it and you get a late registration penalty. HMRC has been getting stricter about this.
Register: gov.uk/log-in-file-self-assessment-tax-return
The tax you will pay
Income tax — same rates as employment (personal allowance, basic rate, higher rate). The difference: you pay it via Self Assessment, not PAYE. So it arrives in one lump sum.
Class 2 NI — flat rate, currently £3.45/week (2025/26). Paid via Self Assessment.
Class 4 NI — 9% on profits between £12,570 and £50,270. 2% above that.
VAT — only if your turnover exceeds £90,000. Optional below that (usually not worth it early on).
The bit that catches most people: payments on account
HMRC does not just bill you for last year. If your tax bill is over £1,000, they also ask for advance payments towards next year — due January and July.
Your first bill can be 150% of what you expect. Budget for it.
What to set aside
Rule of thumb: 25-30% of every payment you receive. Into a separate account. Do not touch it.
If you want a more accurate number based on your actual income and costs: landolio.com/tools/self-employed-tax-calculator
Making Tax Digital — coming April 2026
If you earn over £50k from self-employment, quarterly digital submissions become mandatory from April 2026. Under £50k follows in April 2027.
Check your readiness: landolio.com/tools/mtd-readiness-checker
The full Self Assessment guide
Templates, checklists, and the common mistakes that get people fined — all in the Self-Assessment Recovery Kit (£9).
What is the one thing about self-employment tax you wish someone had told you earlier?
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