Taxation for the Self-Employed

Originally written by Josh Hall, updated by the editorial team on 2nd April 2026

With the introduction of Pay As You Earn, or PAYE, the system of income tax payment became far simpler for employees; no action on the part of the taxpayer was required, as the entire process was carried out by the employer, who simply paid the tax out of wages. The benefits of PAYE have not, however, been passed onto the self-employed. In these cases, it is your own responsibility to pay your income tax and National Insurance contributions.

Registering as Self-Employed

In the first instance, you must ensure that you are registered as self-employed with HM Revenue and Customs. You can do this online or by post, and you must do it promptly - you must register by 5 October after the end of the tax year in which you started self-employment.

As soon as you are registered, you become a Self Assessment taxpayer. This means that you are required to fill in a form at the end of every tax year, detailing your income. This must then be returned to HMRC in order that they can calculate how much tax you must pay. You don't receive a Self Assessment form in April. The online filing deadline is 31 January. If you want HMRC to collect tax through PAYE, you must file by 30 December.

You will receive one of two Self Assessment forms, depending on the complexity of your tax affairs. If your affairs are fairly simple, you will only be required to fill in a four page form. Otherwise, you will receive a ten-page document which will require more detail. In either case, it is vitally important that you keep good records of all of your income and expenditure throughout the year in order that you can fill in your return accurately.

Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.

National Insurance

If you are self employed, you will also pay your National Insurance Contributions (NICs) in a different way. Employees pay one Class of NIC, with the size of their contributions depending upon their income. As a self-employed individual, however, you will probably be required to pay two separate Classes. If your profits are £6,845 or more, you'll be treated as having paid Class 2 NICs without actually paying. If below, you can voluntarily pay £3.50 per week. Furthermore, you will have to pay Class 4 contributions at a rate of 6% on all profits between £12,570 and £50,270, and at a rate of 2% on all profits above that. It is also worth noting that Class 2 NICs pay for benefits like the State Pension and Maternity Leave; they do not count towards the additional State Pension, Statutory Sick Pay or Jobseeker's Allowance. As a result, you may wish to consider taking out a personal pension in addition to your National Insurance contributions.

Although the process of paying your tax as a self-employed person may seem complex, you should bear in mind that you are not alone - many thousands of people fill in the same form every April. Ensure that you keep good records throughout the year, and you shouldn't have any major problems. Good luck!

22 questions

Ask Money Expertise a Question

Dave 24/04/2019 at 11:24 am

I am PAYE and Self Employed through CIS.

I earned £41k in PAYE and a mere £3500 self employed, (before tax)

I have a company car from my PAYE Employer, my tax code changed throughout the 2018/19 tax year because i changed employer (i had a company car with my previous employer)

I work as self employed for extra income.

Do i need to file a self assessment tax return, as the self assessment website states that i do NOT, but i fit the criteria on their checklist to file a return.

Before i turned to PAYE (5 years ago) i was solely Self Employed through CIS and always carried out a self assessment i retrieved a nice tax rebate.

I have tried to complete a self assessment and the calculation states that i owe money, i am confused by this as it is defeating the object of being self employed to earn extra income.
I have received all tax receipts and have proof of earnings etc...
Why would this be?
Thanks

Oggy 01/04/2019 at 5:05 pm

I’m a construction worker on cis can I claim back my 20% tax back on my first 12k tax is deducted before I’m paid although I’m classed as self employed

Mike 03/09/2018 at 7:32 pm

Im registering self employment as of the 10th september 2018 i was wondering when i need to pay my yearly tax and NI bill will it be janurary 2019 or be in by janurary 2020

MoneyExpertise Editor 03/09/2018 at 11:43 am

Much depends upon whether you are earning above the £11,850 per annum personal tax allowance and whether you can attribute expenses to your extra hours (which you can offset against tax). You would have to be clearer on what you earn currently and can expect to earn to have a more accurate answer.

Jonny 01/09/2018 at 2:42 pm

Hi i have just been offered 2 hours working a week on a saturday but it need to be self employed, with invoicing? Is it worth it? And would i pay tax?

MoneyExpertise Editor 31/07/2018 at 2:23 pm

The link here should help answer your question.

jordo 31/07/2018 at 10:09 am

I am a full time student. I have been offered some holiday work with a construction company. I know that I would be under the threshold for income tax but what about CIS tax do I have to pay it and can it be claimed back

MoneyExpertise Editor 16/04/2018 at 3:48 pm

If you are self-employed, you are responsible for paying your own tax and would not have to pay tax through your employer. You would have to discuss why your employer is taking money, with your employer directly.

reyna 13/04/2018 at 9:57 pm

hi I'm self employed as a builder each pay day I get 20% tax taken off me . so when doing a tax return I should get back 20% of my first £11500 made in that year is this right .

Duster 13/03/2018 at 1:03 pm

Hi
I am retired and receive ££126 per week state pension.I have no further income. I have savings income of about £1500 p a for this past year . This does not include my ISAs.which are still invested.

My husband is still working part time and pays tax at 20%.

I have looked at the government website but am confused about the contents. it says that if my taxable income is less than £17500 I will not have to pay tax on any savings income. Do I have to complete a form for the tax inspector informing them of my various savings interest earned or do I just ignore it. Help would be appreciated.

Em 05/12/2017 at 12:20 am

I am not in currently work due to illness and receive benefits. I have been offered the opportunity to cook a few meals a week for an elderly neighbour and would earn £20 a week. Benefits has informed me that it will not effect my benefits. Do I have to register as self employed? What would it entail? Would I end up paying more in NI than I earn?

MoneyExpertise Editor 23/10/2017 at 3:34 pm

Much depends upon your expenditure to do with your business and what you can offset in allowable expenses. You will not pay tax on anything you earn up to £11,500 as this constitutes your personal tax allowance. If, for instance you earned £12,000 and had spent £500 on expenses to do with your business for that particular tax year, then you would pay no tax. You can see how much you would pay in NI here.

JW 21/10/2017 at 12:12 pm

As a self employed person my profit and taxable income is £12,000
How much do you think I'll pay in tax and NI please ?

Confused 17/10/2017 at 1:44 am

As self employed I will earn approx £12,500.00 this tax year do I pay 20% and NI on the whole amount or just the £1000 over the allowance???

Thank you

MoneyExpertise Editor 11/08/2016 at 11:16 am

As a general rule - if you earn £26,000 in 2016/2017 over the year you'll pay £3,000 income tax and £2,153 in National Insurance (£58 tax £41 NI per week). However, if you are self-employed this will differ and will be based on your annual self-assessment tax return.

Jim Editor 16/12/2015 at 11:39 am

@linnet - you would need to fill in a self-assessment tax form which you can do online through the HMRC. You wont need to file the self assessment for this year's earnings until next year, (latest Jan 31 2017).

linnet 15/12/2015 at 1:19 pm

Hi just. Started a new job and Wi'll be self employed for the first month. Then dorky employed from Feb. I do 30 hours a week at £8 an hour how much tax and ni will I have to pay and how do I sort it?

linnet 15/12/2015 at 1:09 pm

I started new job last week and my first weeks wages should be paid this week. It is a new business and the employer is going to pay us As self employed for the month and go to employed from Feb. I have never been self employed and worried about getting into debt . I will be paid £240 a Week for 30 hours. What tax and insurance would I have to pay and how would do it?

MoneyExpertise Editor 30/10/2015 at 11:30 am

I'm a little confussed about your question. If you are self-employed you do not have deductions taken from the money you earn, as you self-assess what tax you will pay. As specified in the article, in the first instance, you must ensure that you are registered as self-employed with HM Revenue and Customs. You can do this online or by post, and you must do it promptly. As soon as you are registered, you become a Self Assessment taxpayer. This means that you are required to fill in a form at the end of every tax year, detailing your income. This must then be returned to HMRC in order that they can calculate how much tax you must pay.

Jola 28/10/2015 at 9:52 pm

Hi as self employed after deductions I have earned £11129.09 how much tax I am going to pay
Thank you

MoneyExpertise Editor 01/10/2015 at 3:01 pm

You don't have to pay National Insurance if you earn below a certain amount - in 2015-16, this is £8,060.

sheen 30/09/2015 at 10:10 pm

Hi I will be self employed soon and will be earning £8000 per year so how much NIC would I have to pay?

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