Frequently Asked Questions

How do I find out about tax, NI and VAT requirements, and when they apply?

As a self employed person you are responsible for settling any tax & NI liabilities direct with the HM Revenue & Customs. Payment of Class 2 National Insurance (currently £2.40 per week) is payable from the time that you register as self employed. This can be paid by direct debit or by normal bill payment every 13 weeks. If your earnings in the tax year do not exceed £5,075 you are able to reclaim these contributions.

Income tax is payable on your earnings after the deduction of your personal allowance and any allowable business expenses. You will need to complete a self assessment tax return at the end of the tax year, and payment of your liability then becomes due.

If HMRC payment deadlines are exceeded then penalty payments become due. At this time you are also liable to pay Class 4 NI contributions on your business profits (09/10 rates - £5,715 - £43,875 = 8%, over £43,875 = 1%).

You must register for VAT purposes if your turnover in the previous rolling 12 month period exceeds £68,000 or you think your turnover may soon go over this limit. You can register voluntarily if you wish, if your turnover is beneath the threshold.

Further information, and up to date rates / thresholds can be found at It may be advisable to take advice on all the above issues from an accountant.

If you need a more detailed response or would like to know more about how we can support your business, please contact us by using our Contact Us form, or alternatively you can email us at or call us on 0844 2640390