If you are self-employed, in simple terms you work for yourself. There is no legal distinction between you as the business and you as the individual. This type of business is often referred to as a Sole Trader.
A sole trader records their income and expenditure and reports this to HMRC via a self-assessment tax return each year. You pay income tax and National Insurance Contributions on the profits of your sole trader business, subject to the thresholds and allowances applicable to that tax year.
Sole Traders take their income from the profits of the business and do not pay themselves a salary. Sole Traders can be employers and can be VAT registered, as with other types of business.
Good To Know
The tax year runs from 6th April to 5th April.
A self-assessment tax return is due to HMRC (online submission) by 31st January following the end of the tax year.
Tax payable (and other amounts such as National Insurance Contributions, Student Loan etc) is due to HMRC by 31st January following the end of the tax year.
First Payment on Account* is due 31st January
Second Payment on Account* is due 31st July
*more information on payments on account can be found here
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