In short
Self-employed people in the UK pay Income Tax and Class 4 National Insurance on their profit (income minus allowable expenses), through a Self Assessment return filed online by 31 January after the tax year ends. Most no longer pay Class 2 National Insurance since April 2024, and the first £1,000 of trading income is tax-free under the trading allowance.
You pay tax on profit, not on everything you earn
Your taxable profit is your self-employed income minus your allowable expenses. If you earn £20,000 from jobs and spend £3,000 on supplies, travel and insurance, you are taxed on £17,000 (this is an example — your figures will differ).
Tax is worked out per tax year, which runs from 6 April to 5 April. You report it on a Self Assessment tax return.
Income Tax
Your profit is added to any other income, such as wages from a job. You get a tax-free Personal Allowance (currently £12,570 for most people), and Income Tax is charged on the rest at basic, higher and additional rates. Scotland has its own rates and bands.
Check the current figures on gov.uk: Income Tax rates and allowances and, for Scotland, Scottish Income Tax.
National Insurance: Class 4, and what changed with Class 2
Class 4 National Insurance is charged on profits above a lower threshold, at a main rate up to an upper limit and a lower rate above it. You pay it through your Self Assessment bill.
Class 2 National Insurance changed from 6 April 2024. If your profits are at or above the Small Profits Threshold, you no longer pay Class 2 — but you still get National Insurance credits towards your State Pension. If your profits are below that threshold, you do not have to pay, but you can choose to pay voluntarily to protect your State Pension record.
Rates and thresholds change, so check self-employed National Insurance rates on gov.uk for the current year.
The £1,000 trading allowance
The first £1,000 of trading income each tax year is tax-free under the trading allowance. If your total self-employed income is £1,000 or less, you usually do not need to register or declare it.
If you earn more, you choose: deduct your actual allowable expenses, or deduct the £1,000 allowance instead — not both. The allowance is better only if your real expenses are under £1,000.
Allowable expenses
You can deduct costs that are wholly and exclusively for your business. See HMRC’s expenses if you are self-employed. Common examples for local service providers:
- Supplies, materials and tools
- Travel between jobs — actual vehicle costs, or simplified expenses using a flat mileage rate
- Business insurance and DBS checks
- The business share of your phone and internet
- Platform commission and card fees — for example, Holler’s commission and the Stripe card fee on your bookings
- Accountancy fees and trade scheme memberships
Things you would buy anyway for personal use, like everyday clothes, are not allowable. Protective clothing and uniforms can be.
Payments on account
This catches many people out in their second year. If your last Self Assessment bill was more than £1,000 (and less than 80% of your tax was already taken at source), HMRC asks you to pay towards next year’s bill in advance, in two payments on account — each usually half of last year’s bill — due on 31 January and 31 July.
Key deadlines
| Date | What is due |
|---|---|
| 5 October | Register for Self Assessment if you started self-employment in the tax year that ended on 5 April |
| 31 October | Paper tax return deadline |
| 31 January | Online tax return deadline; pay any tax owed and your first payment on account |
| 31 July | Second payment on account |
Late filing and late payment bring penalties and interest. Confirm dates on Self Assessment deadlines. If your income goes over the VAT threshold, you must also register for VAT, and Making Tax Digital for Income Tax applies to higher earners from April 2026.
Questions people ask
How much tax do I pay when self-employed in the UK?
It depends on your profit and any other income. You pay Income Tax above your Personal Allowance and Class 4 National Insurance above its threshold. Check current rates on gov.uk, or ask an accountant for your own situation.
Do self-employed people still pay Class 2 National Insurance?
Most do not. Since 6 April 2024, people with profits at or above the Small Profits Threshold no longer pay Class 2 but still get State Pension credits. People below the threshold can pay voluntarily.
When do I pay self-employed tax?
Tax for a tax year is due by 31 January after it ends. If you pay payments on account, there is a second payment on 31 July.
Can I claim the trading allowance and expenses?
No. You either deduct the £1,000 trading allowance or your actual allowable expenses, whichever is better for you — not both.
How much should I save for tax when self-employed?
There is no single right figure, because it depends on your profit and other income. Many people set aside a fixed share of every payment and adjust once they know their first year’s bill.
Keep reading
How to register as self-employed in the UK
How to register as self-employed with HMRC: when you need to, the 5 October deadline, getting your UTR, Self Assessment and the records you must keep.
Sole trader or limited company: which is right for you?
Sole trader or limited company in the UK? The pros and cons of each for cleaners and tradespeople, what changes with tax and paperwork, and when people switch.
Earnings calculator for self-employed pros
Free earnings calculator for self-employed cleaners and tradespeople: enter your price and jobs per week to see your take-home per job, week and year.
Side hustles in the UK: earning with local services
Side hustle ideas in the UK using local services like cleaning and odd jobs: how much time it takes, when you pay tax over £1,000 and how to find customers.