Self-Employed Taxes

In the UK, self-employed individuals are required to complete a self-assessment tax return each year to declare their income and expenses and calculate their tax liability.

We've outlined the main taxes that self-employed individuals need to be aware of in the UK below:

Income tax: Self-employed individuals are required to pay income tax on their profits. These are calculated as a percentage of total income after allowable expenses have been deducted. The tax rates and allowances can vary each year and are set by the government.

National Insurance contributions: Self-employed individuals are also required to pay Class 2 (for tax years prior to 2024/2025) and Class 4 National Insurance contributions (NICs) on their profits. Class 2 NICs are a fixed weekly amount, while Class 4 NICs are calculated as a percentage of profits over a certain threshold.

VAT: If your business turnover exceeds a certain threshold (currently £90,000), you may be required to register for Value Added Tax (VAT) and charge VAT on your goods or services. You can also reclaim VAT paid on business expenses.