Tax Benefits for Self-Employed Individuals in the UK – A 2024/25 Guide
- MW Tax
- May 9
- 3 min read
If you're self-employed in the UK, you're not just your own boss, you also benefit from a range of tax advantages. From claiming business expenses to smart accounting methods, the tax system offers ways to legally reduce your tax bill and maximise your earnings.
In this guide, we'll explain the key self-employed tax benefits in the UK, and how working with MW Tax can help you keep more of your hard-earned income.
What Are the Tax Benefits of Being Self-Employed in the UK?
1. Claiming Allowable Business Expenses
As a self-employed sole trader or freelancer, you're allowed to deduct business expenses from your turnover before calculating your taxable profit. Common allowable expenses include:
Office costs: internet, phone, rent, equipment, stationery
Travel: fuel, train fares, business-related mileage
Subcontractors or staff costs
Marketing and advertising: websites, social media, email campaigns
Accounting, legal, and professional fees
2. Working from Home Tax Relief
If you run your business from home, you can claim a portion of your household bills as a business expense, including:
Gas and electricity
Rent or mortgage interest
Broadband and phone line
Council tax
HMRC allows you to use simplified flat-rate expenses or calculate the exact business-use percentage.
3. Business Vehicle & Mileage Claims
If you use your car for work purposes (excluding regular commuting), you can claim:
45p per mile for the first 10,000 miles
Actual costs such as fuel, insurance, servicing, and road tax
You can choose between simplified mileage or actual running costs—whichever gives a better deduction.
4. Capital Allowances for Equipment
Self-employed individuals can use Annual Investment Allowance (AIA) to deduct the full cost of equipment and tools used in the business (e.g., laptops, printers, machinery). The AIA cap is £1 million per year.
5. Personal Allowance and Tax Bands
Just like employees, you don’t pay income tax on the first £12,570 of profit (2024/25 tax year). The remaining profit is taxed as follows:
20% on profits between £12,571 and £50,270
40% on profits from £50,271 to £125,140
45% above £125,140
6. National Insurance Savings
Self-employed individuals often pay lower National Insurance:
Class 2 NICs: £3.45/week if profits are above £6,725
Class 4 NICs: 8% on profits over £12,570, and 2% on anything above £50,270
7. Cash Basis Accounting
If your turnover is under £150,000, you can use cash basis accounting. This method records income and expenses only when money is received or paid—ideal for managing cash flow and potentially deferring tax.
8. VAT Flat Rate Scheme
For VAT-registered businesses with under £150,000 in turnover, the Flat Rate VAT Scheme simplifies VAT calculations and may let you keep some of the VAT you collect.
How MW Tax Helps Self-Employed Professionals Maximise Their Tax Benefits
At MW Tax, we specialise in helping freelancers, sole traders, and small business owners across the UK take full advantage of the tax reliefs available to them.
Here's how we can help:
Expert expense categorisation: We ensure you're claiming everything you're entitled to—from mobile phone use to software subscriptions.
Cloud-based bookkeeping: We help you stay organised with user-friendly digital tools like Sage or Quick Books.
Tailored tax planning: We go beyond filing returns—we advise on how to structure your finances tax-efficiently throughout the year.
HMRC compliance: Stay on the right side of the rules while maximising deductions.
Free initial consultation: We’ll review your setup and suggest immediate tax-saving opportunities.
Whether you're just starting out or have been self-employed for years, MW Tax is here to help you keep more of your money.
📞 Get in Touch Today
Want to make sure you're not overpaying tax? Contact MW Tax for a no-obligation chat about how we can support your business.
📧 Email: enquiries@me-tax.com📞 Phone: 01790 378487🌐 Website: www.mw-tax.com
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