Being self-employed gives you freedom and control over your working life, but it also comes with extra responsibilities — especially when it comes to tax. Unlike those in traditional employment, self-employed people need to keep their own records, report their income, and pay their own tax and National Insurance. It can feel overwhelming, especially if you’re new to self-employment or not confident with paperwork, but getting it right is vital for keeping your business on track and avoiding problems with HMRC.
At LDF Accountancy Services Ltd, we work with self-employed individuals across many different sectors. From mobile hairdressers to freelance builders, couriers to accountants for taxi drivers, we understand the specific tax rules and challenges that self-employed people face. Many come to us confused about what they need to pay, when to pay it, and how to stay on top of it all. This blog is designed to break things down clearly so you can understand what’s expected of you and how to stay compliant without unnecessary stress.
What Is Self-Employment and How Is It Taxed?
If you work for yourself and aren’t paid through PAYE, you’re considered self-employed. This includes sole traders, freelancers, contractors, and gig workers. You might invoice clients directly, receive cash-in-hand payments (which must still be declared), or earn money through digital platforms. Regardless of the source, if you earn more than £1,000 in a tax year from self-employment, you must register with HMRC and submit a Self Assessment tax return.
Self-employed individuals pay Income Tax on their profits, not their total earnings. Profits are calculated by subtracting your allowable business expenses from your total income. On top of Income Tax, you’ll also pay Class 2 and Class 4 National Insurance contributions, depending on how much you earn. All of this is reported and paid via the Self Assessment system, usually due by 31 January each year. It sounds like a lot, but with good organisation — and the right accountant — it becomes much more manageable.
Registering for Self Assessment and Keeping Records
The first step to managing your tax as a self-employed person is registering with HMRC. This can be done online and should be completed as soon as possible after you start trading. Once registered, you’ll receive a Unique Taxpayer Reference (UTR) number and will need to submit a tax return each year.
Keeping accurate records is essential. You should record every sale or payment you receive, as well as every business-related expense. These might include tools, equipment, insurance, travel costs, mobile phone use, and any other purchases that are necessary for your work. Good record-keeping means you can complete your tax return more accurately, reduce your tax bill by claiming allowable expenses, and protect yourself if HMRC ever requests proof. At LDF Accountancy Services Ltd, we help self-employed individuals set up simple bookkeeping systems — whether that’s digital software like QuickBooks or Xero, or just a spreadsheet and a folder of receipts.
Understanding Tax Deadlines and Payments
The UK tax year runs from 6 April to 5 April the following year. Your Self Assessment tax return is due by 31 January following the end of the tax year — so for the 2023/24 tax year, the deadline would be 31 January 2025. This is also the deadline for paying any tax you owe. If your tax bill is over £1,000, you may also need to make ‘payments on account’. These are advance payments towards next year’s bill and are due in two parts — on 31 January and 31 July.
Many self-employed people are caught off guard by these payments, especially in their first year of trading. That’s why it’s important to plan ahead and set aside a portion of your income for tax throughout the year. We help our clients forecast their likely bill and avoid nasty surprises, so they can manage their cash flow effectively. Paying late can lead to interest charges and penalties, so it pays to stay ahead of the game.
What Expenses Can the Self-Employed Claim?
One of the biggest advantages of being self-employed is that you can deduct certain business expenses from your income before calculating your tax. This means you only pay tax on your actual profit, not your total income. Common expenses include travel costs, fuel (if you use your own car for work), office supplies, business-related phone calls, tools, insurance, uniforms, training courses, and software subscriptions.
If you work from home, you may also be able to claim a portion of your household bills. If you use part of your personal phone or vehicle for work, we can help you calculate the correct percentage to claim. At LDF Accountancy Services Ltd, we make sure our clients claim every legitimate expense, without falling foul of HMRC rules. Many people miss out on tax savings simply because they don’t know what they can claim. We make it clear, accurate, and stress-free.
Should You Register for VAT?
If your business turnover exceeds £90,000 in any rolling 12-month period, you must register for VAT. This means charging VAT on your services and submitting quarterly returns to HMRC using compatible software. For many self-employed people, this doesn’t apply — but if you’re approaching the threshold, it’s important to be aware. Some choose to register voluntarily to reclaim VAT on expenses, but it’s not always beneficial depending on your type of work and customers.
We help self-employed clients decide whether VAT registration is the right move for them. If you do register, we’ll guide you through the process and make sure you stay compliant with Making Tax Digital. With our help, VAT becomes manageable, and your business remains fully up to date with current tax laws. It’s all part of the wider service we offer to support self-employed workers and small business owners alike.
Why Working with an Accountant Pays Off
Many self-employed people start out trying to do their own tax returns, which can work for some — but as your income grows or your situation becomes more complex, it’s easy to make mistakes or miss opportunities to reduce your tax. A good accountant doesn’t just fill in forms — they act as a financial partner, helping you save money, stay organised, and plan for the future.
At LDF Accountancy Services Ltd, we don’t use jargon or overcomplicate things. We explain what you need to know in plain English and offer practical advice that fits your line of work. Whether you’re earning a little on the side or working full-time as your own boss, we’ll make sure your tax is handled correctly, and you’re not paying more than you should. We work with self-employed professionals in trades, transport, hospitality, creative industries, and more. Whatever your setup, we’re here to support you year-round — not just at tax time.
Final Thoughts
Understanding tax as a self-employed person is one of the most important parts of running a successful business. It doesn’t need to be overwhelming, and with the right guidance, it becomes just another part of your routine. Staying organised, claiming the right expenses, and meeting your deadlines will save you money and keep you in HMRC’s good books.
Whether you’re just starting out or looking to get a handle on your existing business finances, LDF Accountancy Services Ltd is here to help. We specialise in working with self-employed people across the UK and can offer straightforward, reliable advice tailored to your trade. If you want clarity, confidence, and support you can count on, we’d love to hear from you.
To find out more, contact the team of professionals at LDF Accountants.
