10 Tax Tips Every Self-Employed Person Should Know

1. Register with HMRC Early

As soon as you start earning as a self-employed person, you need to register with HMRC for Self Assessment. The official deadline is 5 October following the end of the tax year in which you started, but registering sooner means you will receive your Unique Taxpayer Reference (UTR) in good time and avoid a last-minute rush.

Registering late can lead to penalties. Even if you earn below the personal allowance threshold, you must still register if you are self-employed. The process is free and can be done entirely online through the HMRC website. It typically takes 10 working days to receive your UTR by post.

2. Open a Separate Business Bank Account

Mixing personal and business finances is one of the most common mistakes self-employed people make. It makes tracking income and expenses a nightmare, and if HMRC ever investigates, tangled bank statements create unnecessary complications.

Open a dedicated business account -- many high street and digital banks offer free business current accounts. All your fares go in, all your business expenses come out. At the end of the year, your records are clean and straightforward.

3. Log Your Income Daily

It is tempting to leave income tracking to the end of the week or month, but cash fares are easy to forget. If you accept cash payments alongside card and platform payments, you need a reliable system to record every pound.

Make it a habit to log your income at the end of every shift. Record the date, how much you earned in cash fares, card fares, platform income (from Uber, Bolt, etc.), and tips separately. This daily discipline takes less than two minutes and saves hours of headaches later.

With Fyled, you can log income in seconds on your phone, broken down into all four categories. Everything syncs automatically and feeds straight into your tax calculations.

4. Claim All Allowable Expenses

Every legitimate business expense you claim reduces your taxable profit, which means you pay less tax. Many people leave money on the table simply because they do not know what they can claim. As a self-employed person, allowable expenses include:

• Fuel and electric charging costs
• Vehicle repairs, servicing, and MOT
• Insurance (business use portion)
• Road tax (Vehicle Excise Duty)
• Council licence fees and DBS checks
• Mobile phone bills (business use)
• Cleaning and valeting
• Accountancy and software fees
• Parking charges and tolls
• Training and professional development

For a full breakdown, see our complete guide to private hire expenses.

5. Track Your Mileage Religiously

If you use the HMRC Simplified Expenses mileage rate instead of claiming actual vehicle costs, you can deduct 45p per mile for the first 10,000 business miles and 25p per mile thereafter. For a full-time worker doing 30,000 business miles a year, that is a mileage allowance of £4,500 + £5,000 = £9,500 deducted from your taxable profits.

The key word is business miles. Your commute from home to your first pick-up does not count, but miles driven while available for hire, between jobs, and returning to a rank all do. You must keep a contemporaneous record -- HMRC will not accept an estimate.

6. Understand Your Personal Allowance

For the 2026/27 tax year, the personal allowance is £12,570. This means the first £12,570 of your taxable profit is completely tax-free. You only start paying income tax on profits above this threshold.

Understanding this is crucial for tax planning. If your total income after expenses is £30,000, you only pay tax on £17,430. At the 20% basic rate, that is £3,486 in income tax. Add Class 4 National Insurance at 6% (£1,045.80) and you are looking at roughly £4,530 total -- not the£6,000+ you might fear if you did not understand the personal allowance.

If you earn over £100,000, be aware that your personal allowance reduces by £1 for every £2 earned above this threshold, disappearing entirely at £125,140.

7. Embrace Quarterly Reporting

Making Tax Digital (MTD) for Income Tax is changing how self-employed people report to HMRC. Instead of filing one annual tax return, you will send quarterly updates summarising your income and expenses. While this sounds like more work, it actually has real benefits.

Quarterly reporting means you always know where you stand financially. No more nasty surprises in January when you realise you owe thousands. You can see your tax liability building throughout the year and plan accordingly. It also means your records stay fresh -- you are working with data from the last three months, not trying to reconstruct twelve months of activity.

Check our Making Tax Digital guide to see when MTD applies to you and how to prepare.

8. Keep Your Receipts for 5 Years

HMRC requires you to keep records for at least 5 years after the 31 January submission deadline for the relevant tax year. For the2026/27 tax year, that means keeping records until at least 31 January 2033. If HMRC opens an enquiry into your return, they will want to see evidence for every expense you have claimed.

Digital records are perfectly acceptable. In fact, HMRC prefers them. Store photos of receipts, bank statements, and invoices in the cloud where they cannot be lost to a spilt coffee or a car clear-out.

9. Use Dedicated Tax Software

Spreadsheets work, but they require discipline and tax knowledge. Dedicated software designed for self-employed people automates calculations, catches errors, and ensures you never miss an allowable deduction. It also generates the figures you need for your Self Assessment return in seconds.

Fyled is purpose-built for UK self-employed people. It understands your specific expense categories, handles the mileage allowance calculation automatically, and uses the latest HMRC tax rates. You log your income and expenses throughout the year, and Fyled calculates your tax in real time so you always know what you owe.

10. Plan for Payments on Account

This one catches many newly self-employed people off guard. If your tax bill is over £1,000, HMRC will ask you to make "payments on account" -- advance payments towards the following year's tax bill. Each payment is half of your previous year's tax bill.

For example, if your 2026/27 tax bill is £4,000, you will pay the full £4,000 by 31 January 2028, plus a first payment on account of £2,000 for 2027/28 -- totalling £6,000 in one go. The second payment on account of £2,000 is due by 31 July 2028.

The lesson? Set money aside throughout the year. A good rule of thumb is to save 25-30% of your profits into a separate savings account earmarked for tax. That way, the January bill is never a shock.

For all the key dates you need to know, read our HMRC Deadlines 2025/26 guide.