Tax guide
Tax for independent recruitment consultants: a practical guide.
Moving from PAYE employment to self-employment involves a different relationship with HMRC. This is what you need to know before you make the move.
Guide being finalised
This full tax guide is being reviewed to ensure all figures and thresholds are accurate for the current tax year. It will be published shortly. In the meantime, the key points below cover the essentials.
What you need to know now
Self-employment and tax — the essentials.
As a self-employed independent consultant, you pay Income Tax and National Insurance through Self Assessment rather than PAYE. You file a tax return each year, and you’re responsible for setting aside money to pay your tax bill.
What changes from PAYE: Tax isn’t deducted at source. You receive your earnings gross and pay tax in two instalments each year — in January and July. The first year can feel large because it covers the current year plus a payment on account toward the next.
What stays the same: You pay Income Tax at the same rates as employed workers. The personal allowance and rate bands are identical. What differs is the timing of payments and the ability to deduct legitimate business expenses.
Our recommendation: Get an accountant before you start, particularly if you’re new to self-employment. The first year is the most important to get right, and a good accountant who works with contractors and independent consultants will more than pay for themselves. We have preferred suppliers and are happy to make introductions.
This is general information only, not professional tax advice. Tax thresholds and rates are subject to change. Speak to a qualified accountant about your specific situation.
Tax questions?
We can point you to people who know this inside out.
We work with preferred accountancy suppliers who specialise in exactly this: recruitment consultants moving from PAYE to self-employment. We’re happy to make introductions.