UK Self-Employed Tax Guide 2026/27: Self Assessment and Making Tax Digital

If you freelance in the UK, you are usually a sole trader in HMRC's eyes. You pay income tax and National Insurance on your profits through Self Assessment, and from April 2026, many freelancers also have to keep digital records and send quarterly updates under Making Tax Digital.

This guide covers the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027. Rates shown are for England, Wales and Northern Ireland; Scotland has different income tax bands.

This guide is general information, not tax advice. Tax rules change with every budget, so confirm details with your tax authority or a qualified tax adviser before you file.

Do You Need to Register?

You generally need to register for Self Assessment if your self-employed income is more than £1,000 in a tax year. Below that, the trading allowance usually covers it.

The registration deadline is 5 October after the end of the tax year you started. If you started freelancing during 2025/26, that deadline is 5 October 2026. Register on gov.uk as soon as possible to avoid a penalty.

Income Tax Rates for 2026/27

• Personal allowance: £12,570 tax-free

• Basic rate: 20% on £12,571 to £50,270

• Higher rate: 40% on £50,271 to £125,140

• Additional rate: 45% above £125,140

The personal allowance shrinks by £1 for every £2 of income over £100,000. These thresholds are frozen until April 2031, so as your income grows, more of it is taxed at higher rates.

National Insurance for the Self-Employed

• Class 4: 6% on profits between £12,570 and £50,270, and 2% above £50,270

• Class 2: no longer compulsory. If your profits are £7,105 or more, it is treated as paid and your National Insurance record is protected. Below that, you can pay voluntarily at £3.65 a week to protect your State Pension record

Key Self Assessment Deadlines

• 5 October: register for Self Assessment if you are new

• 31 October: paper return deadline

• 31 January: online return deadline, plus payment of any tax owed and your first payment on account

• 31 July: second payment on account

Payments on Account Explained

This catches out many new freelancers. If your last Self Assessment bill was £1,000 or more, HMRC asks you to pay towards next year's bill in advance, in two instalments, each half of last year's bill, due on 31 January and 31 July.

In your first year with a meaningful profit, this means your first January bill can include the full tax for the previous year plus half of it again as your first payment on account. Plan for it. If you know your income will fall, you can ask HMRC to reduce your payments on account.

Making Tax Digital for Income Tax

Making Tax Digital (MTD) changes how you keep records and report to HMRC. It is being phased in based on your qualifying income, which means your gross self-employment and property income before expenses:

• From 6 April 2026: qualifying income over £50,000 in 2024/25

• From 6 April 2027: qualifying income over £30,000 in 2025/26

• From 6 April 2028: qualifying income over £20,000 in 2026/27

If you are in MTD, you must keep digital records using compatible software and send quarterly updates. These are summaries of your income and expenses for the tax year so far, not individual receipts. The standard deadlines are 7 August, 7 November, 7 February and 7 May. You still submit a final return by 31 January.

For 2026/27, HMRC is not giving penalty points for late quarterly updates, but they still have to be sent. New late-payment penalties do apply under the new regime, so paying on time matters even more.

Penalties to Avoid

• Late filing: £100 immediately, then daily penalties after 3 months, then further penalties at 6 and 12 months

• Late payment: percentage-based penalties plus interest, which build up the longer the tax stays unpaid

Allowable Expenses

You pay tax on profit, so claim the business costs you are allowed to:

• Office costs, stationery, software and phone

• Travel for business, excluding normal commuting

• Bank, payment-platform and insurance charges

• Marketing, website and subscriptions

• Training related to your current work

• Equipment, handled through capital allowances, or as an expense under the cash basis

Two simplified options save time:

• Working from home: a flat £10, £18 or £26 a month depending on hours worked at home (25 to 50, 51 to 100, or 101 or more)

• Mileage: for 2026/27, 55p a mile for the first 10,000 business miles in a car or van, then 25p. Older guides quoting 45p are out of date

You can claim the £1,000 trading allowance or your actual expenses, but not both.

VAT

You must register for VAT if your taxable turnover goes over £90,000 in a rolling 12-month period. Below that, registration is optional.

What a UK Freelance Invoice Must Include

HMRC guidance says invoices should show a unique invoice number, your name and contact details, your client's name and address, a clear description of the work, the date of supply, the invoice date, the amount charged and the total owed. If you trade under a business name, include your own name too. If you are VAT registered, VAT invoices must show your VAT number and the VAT separately.

Finviro's free invoice generator covers all of this, with GBP formatting, tax and discounts, hourly or fixed-price lines and a PDF download. No signup. For more detail, see how to write a freelance invoice.

How Much to Set Aside

Basic-rate sole traders often reserve 20 to 30 percent of their profit above the personal allowance to cover income tax and Class 4 National Insurance. Higher earners need more. Remember the extra impact of payments on account in your first year. See how much to set aside for taxes.

Summary

• Register for Self Assessment by 5 October after your first tax year

• Pay income tax and Class 4 National Insurance on your profits

• File online by 31 January and plan for payments on account

• Check whether Making Tax Digital applies to you from April 2026, 2027 or 2028

• Claim allowable expenses, or the £1,000 trading allowance

• Invoice properly and keep digital records all year