PLEASE NOTE: The charity TaxAid advises only those people on low incomes whose problems cannot be resolved with HMRC.

First things to consider

Self-employed - running a business and paying tax

Being in business involves dealing with HMRC. A big part of your relationship with HMRC is working out and paying your own tax. To do this you will need to have good business records.

You will also need to know how to work out your income, what expenses you can deduct from your income and how the tax on your income is worked out. The tax you pay is based on your business profits – the difference between your business income and business expenses.

You need accurate information so that you can correctly fill in your annual tax return, or supply any other information HMRC may want.

You need to be able to work out your total sales (or turnover) at any time. This is because you might have to register for VAT if your total sales go above a certain level (https://www.gov.uk/vat-registration/when-to-register).

When you are self-employed, the tax on your business profits is normally due twice a year – by 31 January and 31 July.

To work out your tax on your business profits you need to consider the items listed in the menu at the right hand side of this page.