Being self-employed in the UK means you manage your own finances — including paying tax and National Insurance. Unlike employees, who have PAYE deductions made automatically, self-employed individuals must register with HMRC, track income, and complete an annual Self Assessment. Understanding how much you owe and when to pay is essential to staying compliant.

Income Tax for the Self-Employed

In the 2025/26 tax year, the Personal Allowance remains at £12,570. This means the first £12,570 of your profits is tax-free. Beyond that:

• Basic rate (20%): income £12,571–£50,270
• Higher rate (40%): income £50,271–£125,140
• Additional rate (45%): income over £125,140

If you earn over £100,000, your Personal Allowance reduces by £1 for every £2 above this threshold, disappearing at £125,140. It is important to note that Income tax is always charged on your business Profits, not on gross income.

National Insurance Contributions (NICs)

Self-employed workers pay two types of NICs:

• Class 2 NICs: £3.45 per week if profits are above £6,725.
• Class 4 NICs: 8% on profits between £12,570 and £50,270, and 2% on profits above £50,270.

These contributions count towards your State Pension and certain benefits, so it’s important not to overlook them.

Registering and Paying HMRC

You must register as self-employed with HMRC. Each year, you’ll file a Self Assessment tax return:

• Online filing deadline: 31 January 2026 (for the 2024/25 year).
• Payment deadline: also 31 January 2026.