Your self-employment checklist – top four planning points

If you are self-employed, you are the head of your own HR department and need to plan accordingly.

If you are one of the 4.4 million self-employed, or are planning to join them, you do not enjoy the kind of support framework provided for employees by the state and an employer. You are effectively employer and employee, so there are some key areas you need to consider.

Income tax

Many employees have minimal dealings with HMRC, thanks to PAYE. No such system exists for self-employed income, meaning that when you begin self-employment you must register with HMRC for self assessment, unless you are already within its remit.

In this tax year there is a further tax complication which employees can ignore. HMRC has declared 2023/24 the transitional year for the self-employed to move from being taxed on accounting year profits to profits earned in the tax year.

National insurance

The self-employed pay two different classes of national insurance contributions (NICs):

  • Class 2 NICs, which form the basis for state pension and other benefit entitlements. It is thus important Class 2 NICs are paid or you
    receive the appropriate credit.
  • Class 4 NICs, which are profit-related, but provide no state benefit entitlements.

Ill-health earnings protection

If you are self-employed, you are not entitled to Statutory Sick Pay. Instead, you are covered by Employment and Support Allowance, the basic level of which is just £84.80 a week if you are aged 25 or over, making private income protection essential.

Retirement provision

Automatic pension enrolment has not yet been extended to the self-employed. Research by the Office for National Statistics showed that for 2018–2020 only one in five of the self-employed were making pension contributions, compared with four in five employees. Unless you are happy to rely on the state pension (currently £203.85 a week from age 66), you need to make your own private provision.


The value of your investment can go down as well as up and you may not get back the full amount you invested.

For specialist tax advice, please refer to an accountant or tax specialist.

The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.