Tax tips for the self-employed


1) Remember to record and claim your business mileage for all trips, as these can add up to a significant amount over the year. Current rates are 45p/mile on the first 10,000 miles and then 25p/mile thereafter. Including trips to the bank and post office, for example.

2) Even if you have not made a profit on your self employment, you still need to declare the income and expenses on your annual tax return.

3) Make sure that you keep receipts/documentation for your self-employed income and expenses.

4) Remember to claim for the use of your main residence as an office, if you do so.

5) You’ll have to keep records of your self-employed business for six years after the tax year they’re for, in case HMRC ask to see these.

6) Remember the tax return deadlines to avoid unnecessary penalties: 31st October if submitting a paper return and 31st January if submitting electronically.

7) Payments on account for the following year are estimated assuming your income will remain the same. If the income has gone down you can apply to reduce these in line with the expected income for the year.

8) If you are both self-employed and employed then any self employment losses can be set against your employment income, and could generate a refund from any tax already paid on employment.

9) Make sure that you avoid the new HMRC penalties for non declaration of income that could double your tax liability.

10) Keep up to date with changes in HMRC regulations, or use a specialist who can do this for you and ensure that you are making the best advantage of these.

11) For the self-employed, accountancy fees also qualify for tax relief – making them even better value.

12) Shop around when choosing an accountant to find one that suits your needs.

13) How much does it really cost you to do your own tax return? Time taken x your hourly rate (+ hassle + worry.)

14) Free tax return & accounts? In many cases the accountants fees are less than the HMRC penalties & charges for doing nothing.

15) Watch out for payments on account, they can add 50% to the first tax bill you were expecting after you start.

16) Would you like extra time to pay your tax? The HMRC business support service may be available