Self-employment
Self-employed people are those who work for themselves. For some people, it is clear they are running their own business and are self-employed. However, it may not be as straightforward for others, and you may need to consider your employment status to decide whether you are employed or self-employed.
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Overview
You can be self-employed by either carrying on a trade by yourself (that is, as a ‘sole trader’), or as a partner in a partnership. You might be self-employed under the Construction industry scheme (also known as CIS), or in the gig economy. You may also be both employed and self-employed for different activities – for example, you could work part-time in the day and run your own unrelated business in the evenings. You may also have more than one self-employment business, sometimes called multiple trades.
Reporting and collecting tax on self-employment income
When you have calculated your taxable profits from self-employment, you will generally need to report that income to HMRC so that you can pay the correct amount of tax and National Insurance contributions.
If you are entitled to trading allowance full relief, you may not need to report this income to HMRC.
If you do have taxable profits to report, once you have registered for self assessment as self-employed with HMRC, you should receive a notice shortly after the end of the tax year to tell you that you need to complete a tax return for the tax year that has just finished.
When starting self-employment, most people will be asked to complete a self assessment tax return.
From April 2026 some self-employed individuals will need to report their self-employed income and expenses in line with the Making Tax Digital requirements rather than through the existing self assessment system. See our Making Tax Digital for income tax detailed guidance to find out who must use this new tax reporting system and how to get prepared.
If you are self-employed, you must normally complete a tax return (either a self assessment tax return or an end of year return under Making Tax Digital) each year to report any liability to tax and National Insurance contributions on your profits. It is not usually possible for HMRC to collect any tax on your self-employment income through deduction at source (although there are exceptions such as working in construction or as an exam marker).
You only pay income tax and National Insurance contributions on any taxable profits you make – that is, the excess of your self-employment income when compared with deductible business expenses. We explain more about this on our page Paying tax on self-employed profits and making payments on account.
