The number of freelancers, side hustlers, and self-employed workers in the UK is rising rapidly. Whether you’re a graphic designer, Uber driver, online seller, or content creator — managing your money well is key to long-term success.
This 2025 guide is packed with practical tips to help self-employed people in the UK stay on top of income, taxes, savings, and more.
📋 1. Register as Self-Employed
If you earn more than £1,000/year through self-employment, the law requires you to:
- Register as a sole trader with HMRC
- File a Self Assessment tax return each year
Register here: gov.uk/set-up-sole-trader
📒 2. Keep Business and Personal Finances Separate
Open a separate bank account just for your business. It helps you:
- Track income and expenses easily
- Stay organized during tax season
- Look more professional to clients
Good options: Starling Business, Monzo Business, Tide
💰 3. Track Every Penny
Use apps like:
- QuickBooks Self-Employed
- FreeAgent
- Xero
- Or even a Google Sheet!
Track:
- Income from clients/customers
- Expenses like software, internet, travel, home office use
Keeping clear records = smooth tax returns + possible deductions
🧾 4. Understand What You Can Claim
Here are common allowable business expenses you can deduct to reduce your tax bill:
- Laptop or phone for business use
- Home office portion (rent, electricity, broadband)
- Travel for work (fuel, trains, mileage)
- Subscriptions/tools/software (Canva, Adobe, etc.)
Full list: gov.uk/expenses-if-youre-self-employed
📆 5. Set Aside Money for Tax
Don’t spend everything you earn!
Set aside 20%–30% of your income for:
- Income tax
- National Insurance
- Payments on account (advance payments for next year)
Use a savings pot or a separate “tax” account to avoid stress later.
📈 6. Pay Yourself a Salary
Treat yourself like an employee. Decide how much you’ll pay yourself each month — and keep the rest for:
- Tax
- Reinvesting
- Emergencies
This helps stabilize your monthly budget, even if income varies.
🏦 7. Save for Retirement
As a self-employed person, you don’t get a workplace pension — so you must build your own.
Options:
- Open a Personal Pension (like with PensionBee, Nest, or Vanguard)
- Or use a Lifetime ISA (LISA) if you’re under 40
You get tax relief or a 25% government bonus — don’t miss it!
🧠 8. Get Insurance & Backup Plans
Being your own boss means protecting yourself:
- Income protection insurance: Pays if you can’t work
- Public liability insurance: If you work with clients or the public
- Emergency fund: Aim for 3–6 months of living costs saved
📌 Quick Checklist
| Task | Done? |
|---|---|
| Registered as self-employed | [ ] |
| Opened business bank account | [ ] |
| Set up tax savings pot | [ ] |
| Tracking expenses properly | [ ] |
| Started pension or LISA | [ ] |
| Got insurance/emergency fund | [ ] |
🔗 Useful Links
- Self Assessment Tax Guide – GOV.UK
- National Insurance for Self-Employed
- Pension Advice – MoneyHelper
✨ Final Words
Being self-employed in the UK brings freedom — but also responsibility. With good money habits, you can grow your business, reduce tax stress, and build a financially secure future.
Start today, and your future self-employed self will thank you.