Self-employed

The term itself says — working for yourself, running your own business.

Being self-employed is both an employment and a tax status. It covers a wide range of people, from those running their own business to freelancers and people working in the gig economy.

Self-employed could be classified as a sole trader or a partner in a business partnership if there are two or more partners.

Record keeping and accounting

Self-employed responsible for keeping records, including what the clients have been charged for goods and services, receipts, bank statements, invoices, and till rolls, PAYE records if you hire people, records of your personal income and any business-related expenses.

You will not need to send your records when you submit a tax return, but you will need to keep them for five years after the relevant tax return submission deadline.

Why you keep records?

You need to keep your records to work out your profit or loss for your tax return or show them to HM Revenue and Customs (HMRC) if asked.

You must make sure your records are accurate.

Here are these costs you can claim as allowable expenses:

• office costs, for example, stationery or phone bills;
• travel costs, for example, fuel, parking, train or bus fares;
• clothing expenses, for example, uniforms;
• staff costs, for example, salaries or subcontractor costs;
• things you buy to sell on, for example, stock or raw materials;
• financial costs, for example, insurance or bank charges;
• costs of your business premises, for example, heating, lighting, business rates;
• advertising or marketing, for example, website costs;
• training courses related to your business, for example, refresher courses.

Allowable expenses do not include money taken from your business to pay for private purchases.

If you start working for yourself, as self-employed, you will be responsible for paying your tax and National Insurance Contributions (NICs), so you will need to register as self-employed and fill in a Self Assessment tax return.

Once registered as self-employed you'll have numerous obligations and responsibilities, like completing an annual Self Assessment tax return.