Self Employed Taxation

Income Tax is a tax you pay on your income. You do not have to pay tax on all types of income, you pay tax on things like:

• profits you make if you’re self-employed – including from services you sell through websites or apps
• some state benefits
• grants and support payments made to you or your business because of coronavirus, including the Self-Employment Income Support Scheme, the Coronavirus Job Retention Scheme, the Small Business Grant Fund or the Retail, Hospitality and Leisure Grant Fund
• the Test and Trace Support Payment in England (or the Self-isolation Support Payment in Scotland and the Self-isolation Support Scheme in Wales)
• most pensions, including state pensions, company and personal pensions and retirement annuities
• rental income (unless you’re a live-in landlord and get less than the rent a room limit)
• benefits you get from your job
• income from a trust
• interest on savings over your savings allowance

You do not pay tax on things like:

• the first £1,000 of income from self-employment – this is your ‘trading allowance’
• the first £1,000 of income from property you rent (unless you’re using the Rent a Room Scheme)
• income from tax-exempt accounts, like Individual Savings Accounts (ISAs) and National Savings Certificates
• dividends from company shares under your dividends allowance
• some state benefits
• premium bond or National Lottery wins
• rent you get from a lodger in your house that’s below the rent a room limit