Going self-employed is a big step. You’re in charge now, calling the shots and building something of your own. But while that freedom feels great, it also means HMRC won’t be sorting your tax for you anymore.

Unlike PAYE jobs where tax comes off your wages automatically, self-employed tax payments are your responsibility. And if you don’t get them right, the penalties can be brutal. That’s why it pays to understand the rules from the start.

The good news is, you don’t have to do it alone. At RIFT, we’ve helped thousands of people just like you sort their tax, stay on the right side of HMRC and even claim money back. Especially in the Armed Forces, construction and the oil and gas industries.

What are self-employed tax payments?

If you’re used to PAYE work, your employer will have handled your tax. But when you’re self-employed, it’s a whole different game.

Self-employed tax payments are how you pay Income Tax and National Insurance on the money you earn running your own business. There’s no employer sorting it for you. Instead, you report your income and expenses to HMRC through a Self Assessment tax return, then pay what you owe yourself.

That means keeping track of what comes in and out matters more than ever. It also means you need to set aside money as you go, so you’re not caught short when your first self-employed tax bill lands.

Let’s say you’re a self-employed roofer bringing in around £40,000 a year. You’ll need to cover Income Tax and Class 4 National Insurance yourself. If you don’t plan ahead, that bill could run into the thousands and come as a nasty shock.

One way to keep on top of things is to open a separate savings account and stash 20–30% of your income in it. That way, when the taxman comes knocking, you’re already sorted.

How to register for self-assessment

Before you can pay tax as a self-employed worker, you need to let HMRC know you’ve gone solo. That means registering for Self Assessment. The sooner you do it, the smoother things will go.

It’s easy to register for Self Assessment online:

  1. Go to the register for Self Assessment page on GOV.UK.
  2. Create a Government Gateway account or sign in.
  3. Fill in the online form to tell HMRC you’re self-employed.
  4. Wait for your Unique Taxpayer Reference (UTR) number to arrive by post. This is your ID for all things tax-related.
  5. Once you’ve got your UTR, you can file tax returns and check what you owe through your HMRC account.

You’ve got until 5 October after the end of your first tax year to register. So if you started earning in July 2024, you’d need to register by 5 October 2025.

Register as soon as you start earning. UTR numbers take time and leaving it late could delay your ability to file and pay on time.

Important tax dates

 

How to calculate what you owe

When you’re self-employed, working out your tax bill isn’t just about what you earn. It’s about what you keep after expenses. That’s your taxable profit. Here’s how it breaks down:

  1. Total income – Add up everything you’ve earned from self-employment.
  2. Minus allowable expenses – Things like tools, PPE, materials, mileage, mobile phone use for work, training and even part of your home running costs if you work from there.
  3. Equals taxable profit – That’s the figure HMRC uses to work out your tax and National Insurance when you’re self-employed.

Then it’s time to apply the tax rules:

  • You get a personal allowance – In 2025, that’s the first £12,570 of profit, tax-free.
  • Anything above that is taxed:
    • 20% on profit up to £50,270
    • 40% on profit from £50,271 to £125,140
    • 45% on anything above that

National Insurance for self-employed in 2025:

  • Class 2 NI – This class has been abolished.
  • Class 4 NI – You’ll pay 8% on profits between £12,570 and £50,270, and 2% above that.

For example, if your profit is £30,000, you’ll pay:

  • 20% Income Tax on £17,430 (£30,000 minus £12,570).
  • 8% Class 4 NI on the same £17,430.

Free income tax calculator

 

When do you start making tax payments?

Wondering when you pay self-employed tax? The UK tax year runs from 6 April to 5 April the following year. But you don’t pay tax at the end of the tax year, you’ll pay the following January. Sounds strange, but here’s how it works.

Your first tax return

Let’s say you start earning as self-employed in May 2024. That falls into the 2024/25 tax year, which ends 5 April 2025. Your first tax return is due 31 January 2026, giving you nearly 10 months to get your figures together and submit them.

Payments on account

Here’s where it gets tricky and catches out a lot of first-timers.

If your tax bill is over £1,000, HMRC expects you to make two advance payments towards the next year’s bill. These are called payments on account, and they’re due on:

  • 31 January – The same day as your main bill.
  • 31 July – Midway through the next tax year.

Each payment is usually half of your last tax bill. If your first bill, due 31 Jan 2026, is £2,000. On that day, HMRC will expect:

  • £2,000 – For your 2024/25 tax year.
  • £1,000 – Your first payment on account for 2025/26.

Then you’ll pay the second £1,000 on 31 July 2026, meaning your first year could cost you £3,000 all at once.

The best thing to do is to file your return early. That way, you’ll know what’s coming and have more time to prepare.

How to make self-employed tax payments

Once you’ve filed your return and know what you owe, it’s time to pay up. Thankfully, HMRC gives you a few ways to do it. Just make sure you use the correct payment reference or your money might not land where it should. This is how you can pay:

  • HMRC online account – Log in to view your bill and pay directly.
  • Direct debit – Set up a one-off or recurring payment.
  • Bank transfer – Use the details on your HMRC account and include your UTR as the payment reference.
  • Debit/credit card – Available through your HMRC account.

When you file your Self Assessment tax return, you’ll usually use the SA100 form. That’s the main form for reporting your income and expenses.

Remember to always double-check your UTR and payment reference before you hit send. One wrong digit can mean HMRC doesn’t mark your payment correctly and could trigger fines even if you paid on time.

What happens if you miss a payment?

When it comes to HMRC, missing a deadline can cost you more than just stress.

Late filing penalties

If you miss the 31 January deadline, you’ll get a £100 fixed fine, even if you don’t owe any tax. After three months, daily penalties of £10 per day can kick in, up to £900. Further delays mean even bigger fines and interest on top.

Late payment penalties

If you miss your payment, HMRC charges interest daily until it’s settled. After 30 days, you’ll be hit with a 5% late payment penalty and more penalties after six and 12 months if it’s still unpaid.

Repeated issues

If you regularly miss payments or ignore reminders, HMRC can take enforcement action, including debt collection or court proceedings.

If you’re struggling, don’t panic. If you can’t pay, it’s always better to contact HMRC early. In many cases, they’ll set up a Time to Pay plan so you can clear the debt in instalments. Or let RIFT handle it for you. We’ll talk to HMRC on your behalf and keep things under control.

Even if you can’t afford to pay, always file your tax return on time. It’ll save you that £100 penalty straight away.

Budgeting tips for self-employed tax payments

Don’t leave your payments to chance. Build it into your routine from day one. Here’s how to stay ahead of the game:

  1. Set aside 20–30% of your income as you earn. This should cover your Income Tax and National Insurance when self-employed.

  2. Open a separate savings account or use a digital “tax pot” to keep the money out of sight and out of mind.

  3. Track your income and expenses monthly so there are no nasty surprises when it’s time to file.

  4. Use simple tools like spreadsheets or budgeting apps made for tradespeople. There are even apps that link to your bank account and help you plan for tax.

Your first self-employed tax bill could be larger than you expect, especially with payments on account included. Planning now means you won’t be scrambling later.

Download our free budget planner

Take control of your tax with RIFT

Getting your self-employed tax payments right can feel overwhelming at first, but with the right support and a bit of planning, it’s totally manageable.

By staying on top of your income, setting money aside and understanding how the system works, you can avoid penalties, reduce stress and even claim money back.

At RIFT, we’re here to make it all easier. We’ll handle the paperwork, deal with HMRC and help you claim every expense you’re entitled to.

Take control of your tax with RIFT. Use our self-employed tax return service to file on time, claim expenses and keep more of your money. Get in touch with us today to start.

Frequently asked questions

When do I make my first self-employed tax payment?

You pay by 31 January after the end of the tax year you started earning. For example, if you started in May 2024, your first tax bill is due 31 January 2026.

Do I have to register for Self Assessment if I earn under £1,000?

If your self-employed income is under £1,000 for the tax year, you could be covered by the trading allowance. But if HMRC has told you to file a return, or you want to claim expenses, you’ll still need to register.

How do payments on account work?

If your tax bill is over £1,000, HMRC asks for two advance payments for the next year, due 31 January and 31 July. Each is usually half your last tax bill.

What expenses can I claim as self-employed?

Typical deductible expenses include tools, materials, PPE, fuel/mileage, mobile phone use, training, subscriptions and office or home-working costs.

What happens if I miss the 31 January deadline?

You’ll get a £100 fine straight away. The longer you delay, the higher the penalties, plus interest on unpaid tax. Always file your return on time, even if you can’t pay right away.