Being self-employed means working for yourself instead of working for an employer.
What you need to remember if you’re self-employed:
- “self-employed” and “sole trader” are the same thing
- if you own a limited company and you’re doing business through it, you’re not self-employed. You’re both a company director and an employee of your own company – at the same time
- you can be employed and self-employed at the same time as well (for example, salesperson by day, Uber driver in the evening)
- you will pay the same rate of Income Tax but a slightly lower rate of National Insurance than if you were employed
- your first £1,000 from self-employment are tax-free – so if you earn less than that from self-employment, you don’t need to declare it or pay tax on it
- that means that if your self-employment expenses are under £1,000, you can just claim this flat £1,000 (called the “Trading Allowance”) instead, and not even bother with receipts
- you need to register as self-employed with HMRC and submit a Self Assessment tax return every year until you tell HMRC that you’ve stopped being self-employed. HMRC will give you a penalty if you don’t.
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