How to go Self Employed
Currently, it seems like we can’t catch a break in the UK. After two years of a pandemic and ongoing economic uncertainty, we’re still facing a cost of living crisis, soaring energy bills, and expenses that make us feel like we are burning money.
It might be surprising to hear this given how challenging things feel, but there has never been a better time to go self-employed than in 2025!
Carry on reading to find out how to go self employed and turn your side hustle into a profession – and a safety net for your future.
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Why become self-employed now?
Having a steady job might seem like the safest option, but think about it – when you’re employed, your salary is fixed. With rising costs, your wage might not keep up, meaning you either need to work overtime (if that’s even possible) or cut back on spending.
When you become self-employed, you control your income. You can work as much as you want, set your own prices, and take on as many customers as you can handle. The best way to tackle rising costs isn’t just cutting expenses – it’s earning more on your own terms.
How do I become Self-Employed?
The beauty of going self-employed is that it’s really easy to start. Most people start their self-employment by trading as a sole trader, but here are some easy steps to follow:
- Register with HMRC within 12 weeks of earning your first income.
- Have a separate business bank account to keep finances clear, although, as a sole trader, there is no legal obligation for you to have one, but it is recommended.
Once you’re self-employed:
- You’ll need to file a self-assessment tax return each year to HMRC.
- With Making Tax Digital (MTD) expanding in 2026, many sole traders earning over £50,000 will have to file digitally – meaning you’ll have to file more regular tax returns with HMRC, so it’s worth getting used to good financial habits now.
Despite the admin, being self-employed can be hugely rewarding. And let’s not forget – an accountant like Mazuma can handle the tax side of things for sole traders, ensuring your self-assessment is filed correctly and on time. Every time. While supporting you throughout your self-employed journey.
Tip: Bear in mind, it takes more than opening a separate bank account and filing a tax return each year. Depending on the industry, there may be a legal requirement or two (or three) you’ll need to meet, including taking out liability insurance, a form of business insurance that affords you professional indemnity. You may also need to complete a course. It’s a good idea to do some research before proceeding.
Don't wan't the hassle of Tax returns?
Does a Sole Trader Pay Tax?
Yes, a sole trader does pay tax. As a sole trader, you are responsible for paying personal tax on the profits generated by your business. This means you’ll need to file a tax return each year and pay any taxes owed.
To calculate your taxable income, you need to keep accurate records of your income and expenses:
- Deduct business expenses from your revenue.
- Pay tax only on the remaining profit.
- Claim allowable expenses (e.g., rent, utilities, software, travel) to reduce your tax bill.
It’s important to note that the specific tax rules and rates can vary depending on your country’s tax laws. In South Africa, for example, sole traders are required to register for Personal Income Tax (PIT) and file an annual tax return. They must also pay provisional tax, which is an estimated tax payment made twice a year.
By understanding your tax obligations and keeping accurate records, you can ensure that you pay tax correctly and avoid any penalties or interest charges.
New to Self Employment?
Becoming self-employed and paying self assessment tax
When you’re self-employed, you calculate and pay your own taxes – unlike employees, who have tax deducted via PAYE. As a sole trader, you pay tax on your trading profits, not your total income.
Each tax year, you must:
- File a self-assessment tax return declaring all income and expenses.
- HMRC calculates what you owe and provides a payment deadline.
- If you have multiple income streams (e.g., freelance work, investments), you must report everything accurately to avoid penalties.
Want to make tax easier? Using professional online accountants like Mazuma can help you manage records and avoid last-minute tax surprises.
To work out your self employed taxable profits:
- Deduct your business expenses from your total income.
- You only pay tax on the remaining profit.
- Claim allowable expenses (e.g., office costs, travel, software, utilities) to reduce your tax bill.
Most sole traders find it tricky to figure out what is and isn’t an allowable deduction – tax rules can be famously unclear! That’s where a good accountant comes in. They’ll ensure:
- You pay tax in the most efficient way.
- You know how much National Insurance you owe and when to pay it.
Anyone with self-employed income or additional income sources must file a self-assessment tax return. This includes:
✔ Sole traders and freelancers
✔ Business owners
✔ People with investment income or rental income
After filing, HMRC assesses your tax liability and issues a notice of assessment. If you owe tax, you must pay it by the deadline to avoid penalties.
Tax can get complex, especially if you have multiple income streams, it’s crucial to keep accurate records and track expenses properly.
By 2026, self-employed individuals earning over £50,000 will need to comply with Making Tax Digital (MTD) meaning more frequent digital tax filings. Staying on top of record-keeping now will make future changes easier to manage.
Individuals who are unsure about their self assessment tax obligations should seek professional advice from a tax advisor. They can help to ensure that the tax return is completed correctly and that all tax liabilities are met for the income business generates.
What about a Limited Company?
Let’s talk briefly about business structures. When going self-employed, most people start as a sole trader, but there may be circumstances where trading through a limited company is a better option. A limited company is much more complex than a sole trader and has many more filing requirements and legal responsibilities. For example:
- Withdrawing money for yourself isn’t straightforward: you’ll need to assess how you pay yourself (via payroll, dividends, or a director’s loan).
- Tax and National Insurance considerations: They are different, so you’ll need to understand what’s due and when.
- More admin and compliance: including filing annual accounts with Companies House and following stricter tax rules.
Therefore, if you’re becoming self-employed and think a limited company might be the best way to run your small business, speak to Mazuma first and we can guide you.
Tops tips for how to go Self Employed
Starting your own business in the UK is exciting and empowering. What better way to take control of your career than by going self-employed?
But let’s be honest running a small business can feel overwhelming and daunting at first. We’ve been there! So here are our top tips to help you get started:
- Done is better than perfect. Don’t wait until you feel like everything is absolutely perfect before you launch. Just get out there and do it! You’ll learn as you go along.
- Get a separate business bank account. It’s not a legal requirement for sole traders (it is a requirement for Limited Companies), but it makes managing finances much easier.
- Make getting paid simple. Use technology like portable card readers to make sure people pay you on time.
- Use invoicing software to stay organised. Tools like those we have created in MazApp see our clients get paid much faster than those who rely on bank transfers from their customers.
- Register with HMRC as soon as possible. Get it done early so you’re ready when your business takes off.
- Hire an accountant from day one. The tax savings will likely cover their fees, and their support is invaluable for a fledgling entrepreneur.
- Have fun! There has never been a better time to go self-employed, take that leap!
Good luck!
