Self-employed tax and National Insurance

If you're self-employed, you are responsible for paying your own tax and National Insurance contributions. You'll need to keep business records and details of your income so you can fill in an annual Self Assessment tax return. You may also need to register for VAT.

On this page:

Register as self-employed with HM Revenue & Customs (HMRC)

It's important to let HMRC know that you're self-employed as soon as possible - even if you already fill in a tax return each year. If you don't tell them as soon as you begin self employment you may also incur penalties.

You can let HMRC know about your new self-employment by registering online for business taxes. You'll be asked for information about yourself and your business. HMRC will set up tax records for you using the information you provide, for example:

  • Self Assessment
  • National Insurance
  • PAYE if you have people working for you

A Self Assessment Online account will be set up for you automatically at the same time.

Register your business for HMRC taxes

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Income Tax and Self Assessment

Once you're registered with HMRC, you'll receive a Self Assessment tax return to complete each year so that you can provide details of your earnings and any other income you get during the tax year (6 April to 5 April). This information is used to work out how much Income Tax you have to pay.

You can find out more about Income Tax, tax return deadlines and the benefits of sending your tax return online by following the links below.

Income Tax - the basics

Tax returns if you're self-employed or in a partnership

Self Assessment Online - the benefits and how to register

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National Insurance contributions

If you're self-employed you normally have to pay Class 2 National Insurance contributions. If your annual profits are over a certain amount you also pay Class 4 contributions. In certain circumstances you may be exempt from paying. Find out more about Class 2 and Class 4 National Insurance contributions, including exceptions, by following the links below.

Class 2 National Insurance contributions

Class 4 National Insurance contributions

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Value Added Tax (VAT)

If your business turnover is more than the VAT threshold (currently £79,000) you'll normally have to register for VAT. Even if your turnover's below the threshold it might benefit your business to register voluntarily.

If you have an accountant they will be able to advise you, or you can ring our VAT Helpline by following the link below.

VAT Helpline

Read the guides below to find out more.

When to register for VAT

VAT - introduction to VAT: what is VAT, how VAT works and different rates

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Self-employed record keeping

Legally you have to keep records for your business and for any other income you get. This is so you can fill in your tax return and show that the figures are right. You'll need to keep at least:

  • invoices for sales and purchases
  • receipts for business expenses
  • bank records

Good records will also save you time and help you run your business more efficiently.

Find out about Self Assessment record keeping for the self-employed

Keeping records

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More useful links

Read more about setting up in business on GOV.UK (Opens new window)

Tax return corrections and refunds

Employed and self-employed tax and National Insurance

Tax when coming to work in the UK

Find out about Capital Gains Tax relief if you work from home

Tax allowances and reliefs if you're self-employed

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