Tax for the Self-Employed

If you work for yourself but do not employ other people then you are taxed as a self employed person rather than as a business. If either a part or the whole of your income comes from freelance work i.e. work that is contracted out as a service, rather than the more regular employment, then you have to register with the Inland Revenue as self employed. When you take this step you also have to inform the benefits and insurance section that you are now self-employed as this changes the amount of National Insurance payments that you will be required to make. If you are self employed then you may be required to make extra Insurance payments as you are not covered by company insurance if you are injured on the job.

In Britain National Insurance is also like another tax as it is people’s insurance payments that cover the basic costs of the National Health and of the Benefits system. When you pay tax as a self employed person you are still allowed to deduct the amount that is not taxable, which currently stands at around £5,000 a year, from the rest of your income, which is. Other than the very high earners, people pay twenty percent of whatever they earn over and above the annual limit.