Self-Employment Tax in the UK: HMRC Self Assessment & SA103F Guide 2025/26

If you are self-employed in the UK - whether as a freelancer, sole trader, consultant, or contractor - you must complete a Self Assessment tax return with HMRC each year. You report your trading income on SA103 (the self-employment supplementary pages) and claim allowable expenses against your profits. Done correctly, this significantly reduces your tax and National Insurance bill. This guide covers the 2025/26 tax year (6 April 2025 to 5 April 2026).

Disclaimer: UK tax law changes each tax year. Always verify figures at gov.uk/hmrc or with a qualified accountant before filing.

Do You Need to Complete a Self Assessment?

You must register for Self Assessment and complete a tax return if you are self-employed and your trading income exceeds £1,000 in a tax year (the trading allowance). If your trading income is £1,000 or less, you may be able to use the trading allowance and not register - but you cannot then claim expenses against that income. Most working freelancers will exceed £1,000 and must register.

Register with HMRC by 5 October following the end of the tax year in which you became self-employed. For 2025/26, register by 5 October 2026.

SA103S vs SA103F: Which Form Do You Use?

The self-employment pages come in two versions:

• SA103S (Short): For annual turnover below the VAT registration threshold (£90,000 for 2024/25, check gov.uk for the current figure). Simpler, with fewer boxes.
• SA103F (Full): Required if your annual turnover exceeds the VAT threshold, if you have more complex affairs, or if you want to claim certain detailed expenses. Most established freelancers will use SA103F.

TaxSort exports expenses pre-categorised to SA103F line items - Office costs, Travel, Premises, Staff, Legal and financial, Marketing, and more - making it straightforward to complete either form.

2025/26 Income Tax Rates and Allowances (England, Wales, Northern Ireland)

• Personal allowance: £12,570 (frozen until April 2028)
• Basic rate (20%): £12,571 to £50,270
• Higher rate (40%): £50,271 to £125,140
• Additional rate (45%): Over £125,140

The personal allowance tapers away by £1 for every £2 earned over £100,000, reaching zero at £125,140.

Scottish income tax rates differ and are set by the Scottish Parliament - Scottish taxpayers should check the current Scottish rates at gov.scot.

National Insurance for the Self-Employed

From 6 April 2024, Class 2 National Insurance was abolished. Self-employed individuals now only pay:

• Class 4 NIC: 6% on profits between £12,570 and £50,270; 2% on profits above £50,270 (2024/25 rates - confirm 2025/26 rates at gov.uk)

Class 4 NIC is calculated automatically on your Self Assessment return based on your taxable profits. Note that abolishing Class 2 NIC means you may need to make voluntary Class 3 NIC payments to protect your State Pension entitlement if your profits are below the Small Profits Threshold (£6,845 for 2024/25) - HMRC will notify you if this applies.

Payments on Account

If your Self Assessment tax bill exceeds £1,000 and less than 80% of your tax is collected at source (e.g., via PAYE on other income), HMRC requires payments on account - advance payments towards your next year's tax bill.

• Each payment on account = 50% of the previous year's Self Assessment bill
• First payment on account: 31 January (same deadline as the balancing payment)
• Second payment on account: 31 July

For the 2025/26 return: balancing payment + first payment on account due 31 January 2027; second payment on account due 31 July 2027.

Allowable Expenses for UK Sole Traders

1. Business Travel and Mileage

HMRC's approved mileage rates for using your own vehicle:

• Cars and vans: 45p per mile for the first 10,000 business miles in the tax year; 25p per mile above 10,000 miles
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

Alternatively, claim actual vehicle running costs (fuel, insurance, servicing, road tax) based on the business-use percentage. The mileage method is simpler for most freelancers. TaxSort's GPS tracker logs every journey automatically, so you have a complete, HMRC-compliant mileage record at year end without manual spreadsheets.

2. Office Costs

Stationery, printer ink, postage, and small equipment used exclusively for business are fully deductible. If you work from a dedicated office outside your home, the full rent and running costs are deductible.

3. Use of Home as Office

If you work from home, HMRC allows two approaches:

• Flat rate: £10/month (25–50 hours), £18/month (51–100 hours), £26/month (101+ hours). Simple but modest.
• Actual costs method: Calculate the proportion of your home costs (mortgage interest, rent, utilities, council tax, insurance) attributable to business use based on the number of rooms and hours used. Yields a larger deduction but requires more record-keeping. Be cautious: claiming a room exclusively for business could trigger a Capital Gains Tax charge on that portion when you sell your home.

4. Phone and Internet

The business-use proportion of your phone and broadband is deductible. If you have a dedicated business line, 100% is deductible. For mixed-use phones, estimate your business usage (e.g., 70%) and deduct that percentage of the annual cost.

5. Software and Subscriptions

Business software, cloud tools, professional membership fees, and industry subscriptions are allowable expenses. Scan and store every receipt with TaxSort - expenses are automatically categorised under the correct SA103F line item.

6. Professional Fees

Accountancy fees, legal fees related to your business, and professional indemnity insurance premiums are fully deductible. Note: legal fees for buying or selling a business asset are capital in nature and not deductible as a revenue expense.

7. Training and Development

Costs of training that updates or improves skills used in your existing trade are allowable. A web designer paying for an advanced CSS course qualifies. Training to start a new business or career does not.

8. Advertising and Marketing

Website costs, online advertising, business cards, and promotional materials are allowable expenses. Client entertainment (meals, events) is generally not allowable under UK rules - HMRC does not permit deduction of business entertainment costs.

9. Capital Allowances

Equipment, computers, and tools above the annual investment threshold are claimed via capital allowances rather than as direct expenses. The Annual Investment Allowance (AIA) allows 100% of eligible capital expenditure up to £1 million per year to be deducted in the year of purchase. First-year allowances may also apply to certain qualifying items.

VAT Registration

You must register for VAT once your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period (2024/25 threshold - confirm the current threshold at gov.uk). Once registered, you charge VAT on your services and can reclaim VAT on business purchases. The Flat Rate Scheme simplifies VAT accounting for many freelancers with low VAT-able purchases - worth exploring with your accountant.

Self Assessment Filing Deadlines

• 5 October 2026: Register for Self Assessment (if new to self-employment in 2025/26)
• 31 October 2026: Paper return deadline for 2025/26
• 31 January 2027: Online return deadline + balancing payment + first payment on account due
• 31 July 2027: Second payment on account due

How TaxSort Supports UK Freelancers

TaxSort is fully configured for HMRC rules and SA103F categories. Scan receipts with the AI camera and they are instantly sorted under the correct HMRC expense category. The mileage tracker uses HMRC approved rates automatically (45p/25p per mile). At tax time, export a complete SA103F-ready breakdown your accountant can use, or use it to complete your own return via HMRC's online Self Assessment service.

Bottom Line

Self Assessment does not have to be stressful. The key is keeping accurate records throughout the year - not scrambling in January. With TaxSort, every receipt and every business mile is captured automatically, so your tax return is built in real time, not under pressure.