Self-Employment Tax Guides
Practical guides to tax, NI, and Self Assessment for people with side income.
Tax on a side income is mostly a question of thresholds. Below a certain level of trading income you have nothing to report at all. Above it you need to register for Self Assessment, file a return, and pay income tax and National Insurance on the profit rather than on the money coming in.
The distinction between turnover and profit is where most of the confusion sits. You are taxed on what is left after allowable expenses, so the amount that lands in your bank account is rarely the amount that gets taxed. Understanding which costs are allowable, and keeping the evidence for them, is the difference between a manageable bill and an unnecessarily large one.
The other complication is that a side hustle usually sits on top of employment. Your employer has already used your personal allowance through PAYE, which means side income is typically taxed from the first pound at your marginal rate rather than tax free. That surprises people who assume the allowance applies again.
All guides
Self-Employed Tax Calculator Scotland: How Scottish Income Tax Affects You
The 2026/27 Scottish Income Tax bands compared to the rest of the UK, with a worked example for the self-employed.
National Insurance for the Self-Employed: Class 2 and Class 4 Explained
How NI contributions work for sole traders, what Class 2 and Class 4 NI cost, and how they affect your State Pension entitlement.
Self Assessment for Side Hustles: What You Need to Know
When you must register for Self Assessment, what to include in your tax return, and the key deadlines to avoid HMRC penalties.
The £1,000 Trading Allowance Explained
How the trading allowance works, when to claim it, and when it's better to deduct actual expenses instead.
Working out what you owe
Read the guide covering your situation, then use the calculators to estimate the bill. If you are employed as well as self employed, use the combined calculator rather than the self employed one on its own, because the interaction between PAYE and Self Assessment is exactly where the estimates diverge.
Two things worth doing early: set aside a proportion of every payment received rather than finding the money in January, and keep records as you go. Reconstructing a year of expenses from bank statements the week before the deadline is how allowable costs get missed. This is general information rather than tax advice, and if your circumstances are complex an accountant will usually save more than they cost.
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