Self employed in the UK

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What does it mean to be self employed in the U.K.

being self employed

Starting new business

  • Firstly you are the business, so you are working for yourself.
  • Your responsible for paying your own tax and n.i contributions
  • The total running of the business rests with you unless you can afford to employ others
  • You need to sort out your business plan especially if you need to borrow money
  • Keep accounts of income and expenditure
  • What can be offset against your liability for tax (all running costs and if working from home can claim some of the costs of utility bills
  • If you have employees your responsible for the payroll, sick pay and perhaps contributions to a pension scheme
  • Should you decide to be a sole trader you are responsible for all liabilities , if the company was to fold you would have to pay all outstanding debts and if you are unable to do so any assets you own including your home can be used to do this. Your accounts would remain private
  • Limited company would mean the liabilities for any debts are the responsible by the company as it becomes its own entity however you would need to register with Companies House and adhere to there rules and your company details is in public domain if your trying to build up credit this may help as it would give lenders an overview of how the company is progressing.


Going into business for yourself whilst exciting can be very daunting at the same time there is help and advice out there and depending on your circumstances you may be able to access free workshops etc to help you get going and understand best way to proceed.

There are a number of organisations out there to help such as Business Gateway if your in Scotland or Chamber of Commerce, they offer business start up advice, workshops to help you understand the running of a business and the responsibilities you have.

Inland Revenue also run an online course or there is a chat line service available for those filling in a return for the first time if you want to find out more check out there are many resources relating to tax queries.

If you do not feel confident is doing your own tax returns you can consider hiring an accountant to do this for you but make sure you know the costs involved up front.

Depending on the type of work you are doing you will also need to look at what insurances you will need, if your selling products you will need product insurance, if your going into peoples home or you have an office you will need public liability so you will need to know what is involved and the costs to.

Make sure you shop around the bank will try and sell your theirs but it is not always the best deal, again you can always contact Chamber of Commerce for advice.

Do not use your personal account for business matters make sure you open a business bank account there are many who will give you free banking for one year sometimes longer once again shop around, personally I prefer to have a different bank to my personal one.

Business Banking also offers some support either by having a personal adviser or could be a monthly newsletter offering advice.

There is also many networking groups or breakfast clubs that meet up on a regular basis to help support one another or give advice this is a good way to meet like minded people and help build up resources, check the Chamber of Commerce paper they have listings there also worthwhile checking local newspapers to, look for local connections online to if you use the internet.

Out of safety please make sure you meet in a public place when arranging to meet someone you have gotten to know online and let someone know where you are get them to call and check all is ok during the meeting

gather for meeting

getting together

If you are not sure how to do your taxes you can get help online or sometimes there are free workshops locally to help you, once again check with your local Chamber of Commerce or Business Gateway

11 thoughts on “Self employed in the UK

  1. Mark

    Hi, I think you should remember when starting self employed work that you can if you also have a PAYE job potentially claim back income tax that you have paid. This would be the case if you made losses when you started up the self employed business. Best wishes Mark

  2. Angel

    Dear Katie,

    Yes, I agree working through an online business for oneself is quite rewarding. You set your own hours, don’t need someone to boss you around, you call all the shots, you are in complete control, and not to mention it is to your discretion on choosing what to promote or what not to promote on your Website. 🙂

    I have much to learn still and look forward to reading more from you in the days ahead. 🙂

    Wishing you all the best with your online success above and beyond the horizon,


    1. Katie Post author

      Thank you Angel for your comment, there is many advantages to working for yourself and it pays to be organized and have a schedule to work to as well

  3. Lee

    Thanks for such an informative post! I am considering setting up a small business next year that will hopefully get my mum out of her current job and give her something more manageable. I will certainly be keeping an eye on your site as i know taking on a part timer for busy days was almost a certainty but reading above i may need to put a little more thought into it.

    1. Katie Post author

      Thank you for your comment Lee thought there is a lot to learn and build it is worth working at as this way of working is so flexible, and I feel if I can do just about anyone can, it does take time and patience but it works

  4. Dan

    Hi Katie 🙂 I am not yet in the position where I can exist financially from my online endeavours (hopefully soon).

    Am I correct in thinking that there is a certain amount you can earn each year that is not taxed (I think it might be £9,000?)

    What does ‘registered for VAT’ mean – is it something that concerns affiliate marketers or only if you are selling physical goods yourself?


    1. Katie Post author

      Hi thank you for your comment in response to your questions, each year the tax allowance can vary, for this coming year the allowance is £11,000 , with regards to VAT it can affect anyone if you have a turnover of more than £82,000 per year or if you achieve this within a 30 day period, vat is normally associated with products, it is always best to check with the Tax office as really our income is commission based, I would be assuming it is offset against your personal allowance

  5. Nahim

    Working with affiliate programs really is amazing, and once you get your web site running, you realize that the moment you start getting traffic, it will most likely keep increasing. Of course it takes time to achieve that, but once you`ve done it you are pretty much set. So remember to work ar at your site and may God bless you.

    1. Katie Post author

      Thank you for stopping by and I agree with the right tools you can create a good business

  6. Mike

    I think a lot of your advice is very good and it apples to being self employed probably in a lot of places around the world. Certainly many of the points you raise would be true for those of us in the United States as well. Great source of information for those thinking about a self-employed venture to understand the basics.

    1. Katie Post author

      Thank you for your input Mike there are many benefits as well as down sides to working from home however with job security not at its best people are having to look at either topping up their income or building something better for the future


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