A sole trader is the legal term for self-employed individuals in the UK. If you’re a sole trader, you need to do a few things:
You might also have to pay your tax bill using Payment on Account. Doing it for the first time might cause a bit of a shock – you’ll have to pay an extra 50% of your tax bill. It’s OK, though, don’t panic. It’s just an advance payment and you can reduce it or get a refund.
Also, while technically you may “work for yourself”, HMRC will not consider limited company directors to be “self-employed”. A limited company is a separate entity from you. When you’re a sole trader, your business and you are one – sometimes that might mean you’re taking a risk (you can get personally sued by a client, for example), but it’s much easier and cheaper to do your taxes. Plus you can always purchase inexpensive sole trader professional liability insurance.
Of course we can! We know that as a freelancer, director or contractor it can be confusing to handle your own accounts and tax records, so contact our experts for advice and support today!
If you are a self-employed director, remember to file your Self Assessment by 31st January the year after the tax year you’re paying for. For example, if you’re paying your 2023/2024 tax return, this should be paid by 31st January 2025.