Mastering your tax bill

You should be aware of the minimum level of profits to qualify for a national insurance contribution, which for the current tax year is £6,500 for the year 2025/26 tax year. For more information, click here.

You should also be aware of the personal allowance – this is the amount of income you can earn without paying tax. For the current tax year (2025/26), this is £12,570. This is the amount of income you can earn without paying any tax. Any income earned above this amount will be subject to income tax.

If you are operating a limited company, you should be aware of the dividend allowance, which is the amount of dividends you can receive tax-free.

The dividend allowance for the 2025/26 tax year remains £500. Any dividends received above this amount will be subject to income tax. This depends on the level of profits as a sole trader, compared to the way corporation tax, dividend tax and PAYE taxes work when running a limited company. 

If you’re working as a freelancer, you’re entitled to claim tax relief on certain expenses that are incurred as part of your business. These expenses can include things like office costs, travel expenses, and training costs.

Additionally, there is a trading allowance of £1,000 a year, which allows you to earn a small amount of money from trading or property rental without having to register as self-employed or pay tax on it.

If you work from home as a freelancer, you may be eligible for relief on your home office expenses. This can include a proportion of your utility bills, internet costs, and other expenses related to working from home.

If your business has a turnover of less than £150,000 per year, you may be eligible to register for the flat rate VAT scheme. Under this scheme, you will pay a flat rate of VAT on your sales instead of the standard rate. This can be beneficial for freelancers as it can reduce the amount of VAT you have to pay.

If you are selling a business or business assets, you may be eligible for entrepreneurs’ relief or business asset disposal relief. These reliefs can reduce the amount of capital gains tax that you have to pay on the sale.

If you are starting a new business or setting up as a freelancer, you may be eligible for a start-up loan. The government provides these loans and can be used to help cover the costs of starting a business, such as buying equipment or renting office space.

If you are involved in research and development as a freelancer, you may be eligible for specific tax relief. This can reduce your corporation tax bill or increase your payable tax credit.

If you are on a low income you may be eligible for universal credit or other benefits. These benefits can provide financial support to help cover the costs of living and working and may also open up other forms of financial support.

There are other benefits available such as the Creative Industries’ Tax Relief and the Film Tax Relief, which may apply to those working in the film and TV industry. Those struggling with sickness or who are Disabled can also access support.

Use our confidential Benefits Calculator to check which benefits you may be eligible for. This simple tool helps you navigate the system and understand the financial support available to you.