Self-Employment - Tax considerations for self-employed individuals

Income from self-employment is set on the Employment screen, by selecting an Income Source of Self Employed

Unlike employed individuals and company owners, self-employed individuals are not assumed to pay tax via PAYE. Instead, they pay income tax at assessment, in the subsequent year of the plan.  They are also subject to Class 2 and, possibly, Class 4 National Insurance tax rates also.

In plans with self-employed individuals, there would likely be a tax bill coming due in the first year of the plan. The software has no way of deducing what your client's earnings were in the year prior to the plan. Therefore, be sure to enter these carryover taxes – and for that matter other allowances that may need to be carried over from the plan’s prehistory – on the Taxes screen. Fields for these entries are found in the Previous Year Tax Carry-over section of that screen.


Related topics

Taxes for self-employed individuals in the first year of the plan