Your First Steps
When you start working for yourself, you need to:[1]
- Register with HMRC as self-employed (within 3 months of starting, or by 5 October following your first tax year)
- Register for Self Assessment — this happens as part of the process[2]
- Start keeping records of all income and expenses from day one
- Set aside money for your tax bill
What Tax You’ll Pay
As a self-employed person, you’re responsible for:[3]
- Income Tax on your profits (after deducting allowable expenses)
- Class 2 NI — a flat weekly rate (£3.65/week in 2026/27)
- Class 4 NI — 6% on profits between £12,570 and £50,270, plus 2% above that[5]
Key Deadlines in Your First Year
| Deadline | What You Need to Do |
|---|---|
| Within 3 months of starting | Register with HMRC |
| 5 April | End of tax year — your records should be complete |
| 31 October (paper) / 31 January (online) | File your Self Assessment return |
| 31 January | Pay your tax bill (plus first payment on account) |
Claiming Expenses
You can deduct allowable business expenses from your income before calculating tax. Common deductions include:[4]
- Office supplies, software, and equipment
- Travel and vehicle costs
- Working-from-home costs
- Professional services (accountant, insurance)
- Stock and materials
How Much to Set Aside
A common rule of thumb is to set aside 25–30% of your profits for tax and NI. Open a separate savings account and transfer the money regularly so it’s there when the bill arrives. From April 2026, sole traders with income over £50,000 must also keep digital records and file quarterly under Making Tax Digital.
Consider a Budget Payment Plan: You can make regular payments to HMRC throughout the year, so you don’t face a big bill in January.
Frequently Asked Questions
How do I register as self-employed with HMRC?
You must register with HMRC as self-employed within 3 months of starting your business, or by 5 October following your first tax year. Registration for Self Assessment happens as part of the same process.
What tax do self-employed people pay in the UK?
Self-employed people pay Income Tax on their profits plus Class 2 National Insurance (£3.65 per week in 2026/27) and Class 4 NI at 6% on profits between £12,570 and £50,270, then 2% above that.
How much should I set aside for tax if I am self-employed?
A common rule of thumb is to set aside 25–30% of your profits for Income Tax and National Insurance. It helps to transfer this regularly into a separate savings account so the money is there when your bill arrives.
When is the Self Assessment deadline for newly self-employed?
Your Self Assessment return must be filed by 31 January (online) or 31 October (paper) following the end of the tax year. Your tax bill is also due by 31 January.
Further Reading
- Registering as Self-Employed
- Allowable Expenses
- Cash Basis vs Accruals
- Making Tax Digital for Income Tax
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Sources
- Working for yourself — GOV.UK
- Register for Self Assessment — GOV.UK
- Self Assessment tax returns — GOV.UK
- Expenses if you're self-employed — GOV.UK
- National Insurance for the self-employed — GOV.UK