The Complete UK Tax Guide for Freelancers and Expats

Self Assessment tax returns

Self Assessment is how HMRC collects Income Tax from people whose tax is not deducted automatically through PAYE. If you are a sole trader, freelancer or contractor, or you have significant income outside employment, you complete a return each year.

The guide lists who has to file: self-employed sole traders and freelancers above the small trading threshold, partners in a partnership, company directors who are not on PAYE alone, people with property, savings or investment income above the relevant thresholds, high earners, people liable for the High Income Child Benefit Charge, ministers of religion, and anyone with reportable foreign income.

The tax year runs from 6 April to 5 April. The online return and any tax owed are due by 31 January after the tax year ends; paper returns have an earlier deadline of 31 October. You register through the HMRC website, receive a Unique Taxpayer Reference by post, and need a Government Gateway account.

Income Tax bands and National Insurance

Income Tax rates depend on where in the UK you live. England, Wales and Northern Ireland share one set of bands, running from the Personal Allowance through basic, higher and additional rates. Scotland sets its own rates and has more bands, from a starter rate at the bottom to a top rate at the highest incomes.

The guide also covers the Personal Allowance taper, where the allowance is withdrawn gradually once income passes a set level, creating a higher effective marginal rate over that stretch of income. Marriage Allowance lets a lower-earning spouse or civil partner transfer part of their Personal Allowance to a basic-rate partner.

For National Insurance, the guide explains that mandatory Class 2 was abolished from 6 April 2024. Self-employed people pay Class 4 on profits between the lower and upper profits limits, at a reduced rate above the upper limit. Voluntary Class 2 remains available below the Small Profits Threshold to protect a State Pension record, and voluntary Class 3 can fill gaps, which matters particularly for expats with periods of non-UK employment.

VAT, the nine boxes and VAT schemes

VAT is charged on most goods and services sold in the UK. Once your taxable turnover passes the VAT registration threshold you must register, and you can register voluntarily below it. The guide sets out the four VAT treatments: standard rate for most goods and services, a reduced rate for things like home energy and child car seats, zero rate for most food, children's clothing, books and newspapers, and exemption for insurance, education, health and financial services.

Every VAT return has nine boxes. Box 1 is VAT due on sales, Box 2 is VAT due on acquisitions under the Northern Ireland rules, Box 3 is the total of the two, Box 4 is VAT reclaimed on purchases, Box 5 is the net position, Boxes 6 and 7 are the net values of sales and purchases, and Boxes 8 and 9 cover Northern Ireland supplies and acquisitions.

The Cash Accounting Scheme lets you account for VAT when money moves rather than when invoices are issued, which helps cash flow. The Annual Accounting Scheme replaces four returns with one, with interim payments through the year. Both have turnover ceilings.

Making Tax Digital

Making Tax Digital is HMRC's programme to move tax record keeping and filing into software. MTD for VAT started in April 2019 for larger VAT-registered businesses and was extended in April 2022 to every VAT-registered business regardless of turnover.

MTD for Income Tax Self Assessment begins in April 2026 for self-employed people and landlords above the first qualifying income band, with the band lowered in April 2027 and again in April 2028.

The guide states that Taxmo is MTD-compliant: it connects to HMRC's APIs with full fraud prevention header compliance, so you can link your HMRC Government Gateway account and file VAT returns from the product.

The VAT Flat Rate Scheme and allowable expenses

The Flat Rate Scheme replaces per-transaction VAT tracking with a fixed percentage of gross turnover, set by business sector. There is a turnover ceiling for joining. Businesses whose spending on goods is very low count as limited cost traders and must use a single higher flat rate regardless of sector, a rule introduced to stop the scheme being used by businesses with almost no input costs.

Allowable expenses reduce taxable profit and must be incurred wholly and exclusively for business. Where something is used for both business and private purposes, such as a phone, you claim the business proportion. The guide groups expenses into office and premises, travel and vehicles, staff and subcontractors, technology and equipment, financial and professional costs, and marketing and sales.

Larger purchases such as equipment, vehicles and machinery are handled through capital allowances rather than deducted outright. The Annual Investment Allowance covers qualifying assets up to an annual limit, and anything beyond it goes into a pool written down at a set rate each year.

Deadlines, record keeping and payments on account

The key dates are 5 April for the end of the tax year, 6 April for the start of the new one, 31 July for the second payment on account, 5 October to register for Self Assessment if you are newly self-employed, 31 October for paper returns, and 31 January for the online return and payment. VAT returns are due one calendar month and seven days after the end of each VAT quarter.

HMRC requires records of all sales and income, all business expenses with receipts, VAT records if registered, mileage logs, bank statements, payroll records, records of assets bought and sold, and annual accounts. Records must be kept for a set number of years after the 31 January deadline, and longer for VAT.

Payments on account are advance instalments towards next year's bill, required when your Self Assessment liability passes a set amount and most of your tax was not collected at source. The first falls on 31 January alongside the balancing payment and the second on 31 July. You can apply to reduce them if your income has fallen, but interest is charged if you reduce them too far.

Expat and international tax, and email receipt capture

For expats the guide covers the Statutory Residence Test with its automatic overseas test, automatic UK test and sufficient ties test; split-year treatment for people arriving or leaving part way through a tax year; Double Taxation Agreements and the relief methods they offer; and the reform of the remittance basis from April 2025 into a residence-based foreign income and gains regime. It also covers National Insurance for people working abroad, including certificates of coverage and voluntary Class 3 contributions.

The page also describes Email Receipt Capture in Taxmo. Paid-plan users get a unique forwarding address shown at the top of the Scan Receipt page. Forwarded vendor receipts and invoices are read by Taxmo AI, which extracts vendor name, amount, date and VAT from PDF and image attachments, and draft expenses appear on the Scan Receipt page for review before saving. The address can be regenerated instantly if it is compromised.

Common questions