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 (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.
If you have a limited company, you would not be self-employed with respect to the work carried out through that company. See our page on limited companies for more information.
Reporting 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 (NIC). This is usually done through the self assessment system.
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 self assessment tax return for the tax year that has just finished.
From April 2026 some self-employed individuals will need to report their self-employed income and expenses in line with the Making Tax Digital (MTD) requirements rather than through the existing self assessment system. See our Making Tax Digital for income tax page to find out who MTD applies to, when it is mandatory to follow the new rules and how to get prepared. This new way of providing HMRC with details of self-employment income is currently in the testing stage.
Collecting tax on self-employment income
If you are self-employed, you must normally complete a self assessment tax return each year to report any liability to tax and NIC 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 NIC 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.
