When you move into self employed consultancy, your relationship with tax changes completely. No more PAYE. No more employer handling your National Insurance. Just you, a self-assessment return, and a deadline you really do not want to miss.
At APH, we’ve helped hundreds of consultants across the UK get their tax set up correctly since 2010.
This guide covers the essentials in plain English.
First things first: registering with HMRC
The moment you start earning money as a self-employed consultant, the clock starts ticking on your registration.
You must register with HMRC for self-assessment by 5th October following the end of the tax year in which you started trading. Miss this and you risk a penalty before you’ve even filed your first return.
Registering is straightforward, but getting your records in order from day one makes everything that follows considerably easier.
You’ll need a Government Gateway account and your National Insurance number to get started. HMRC will then issue you a Unique Taxpayer Reference, which you’ll use for all future correspondence and returns.
“I’ve been using APH Accountants since I went self-employed in 2018 and they have been amazing to work with. Paul always adds a friendly and personable touch.” — Scott Woolley
If you’re just starting out and want to make sure everything is set up correctly from the beginning, book a free consultation call with us here.
Sole trader or limited company: which are you?
This is one of the first and most important decisions you’ll make as a self-employed consultant.
The structure you choose affects how much tax you pay, how you pay yourself, and how much admin you take on.
As a sole trader, you register as self-employed and pay income tax and National Insurance on your profits through self-assessment. It’s simpler to set up and run.
As a limited company director, your business is a separate legal entity. You typically pay yourself a combination of salary and dividends, which can be more tax-efficient at higher income levels. However, it comes with more administrative responsibilities, including filing accounts with Companies House and paying corporation tax.
As a rough guide, once your consultancy profits are consistently above £30,000 to £35,000 per year, it’s worth exploring whether a limited company structure would work better for you. We can help you assess this based on your specific situation.
You can read more about our limited company accountancy services here.
How income tax works for self-employed consultants
As a self-employed consultant, you pay income tax on your profits, which is your income minus your allowable business expenses.
The current income tax bands for the 2025/26 tax year are:
- Personal Allowance: up to £12,570, taxed at 0%
- Basic rate: £12,571 to £50,270, taxed at 20%
- Higher rate: £50,271 to £125,140, taxed at 40%
- Additional rate: above £125,140, taxed at 45%
Getting your allowable expenses right is one of the most effective ways to reduce your taxable profit and therefore your tax bill.
We’ve written a separate guide covering 12 consultant tax deductions you can claim in the UK which is worth reading alongside this one.
National insurance contributions
On top of income tax, self-employed consultants pay National Insurance contributions.
For the 2025/26 tax year:
- Class 2 NICs: voluntary for most, but worth paying to protect your state pension entitlement
- Class 4 NICs: 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270
National Insurance is often the part of the self-employed tax picture that catches people out, particularly in their first year when they haven’t budgeted for it.
Both income tax and National Insurance are paid through your self-assessment return.
Self-assessment: key deadlines to know
Missing a self-assessment deadline results in an automatic penalty, even if you don’t owe any tax.
The key dates to have in your diary:
- 5th April: end of the tax year
- 5th October: deadline to register for self-assessment if you are newly self-employed
- 31st January: deadline for online self-assessment returns and payment of any tax owed
- 31st July: second payment on account deadline if applicable
Payments on account are advance payments toward your next tax bill, and they catch a lot of new consultants off guard in their second year of trading.
If your tax bill for the year exceeds £1,000, HMRC will ask you to make two payments on account toward the following year’s bill. This can feel like a double hit if you haven’t planned for it.
VAT: do you need to register?
You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period.
You can also register voluntarily below this threshold, which can make sense if your clients are VAT-registered businesses who can reclaim the VAT you charge.
For consultants who are VAT registered, the Flat Rate Scheme is worth exploring as it can sometimes result in a small financial benefit depending on your sector.
If you’re unsure whether VAT registration makes sense for your consultancy, this is exactly the kind of question we can help you answer clearly.
Making tax digital: what’s coming in April 2026
From April 2026, self-employed consultants with income above £50,000 will be required to follow Making Tax Digital rules.
This means keeping digital records and submitting quarterly updates to HMRC rather than a single annual return.
If your consultancy income is above this threshold, now is the time to make sure your record-keeping and accounting software are set up to handle this.
APH can help you get MTD ready well ahead of the deadline. Speak to us today to find out what you need to do.
Do you need an accountant?
Technically, no. You can file your own self-assessment return.
But the question is not really whether you can. It’s whether you should.
A specialist accountant makes sure you’re claiming everything you’re entitled to, keeps you on the right side of HMRC, helps you plan ahead rather than just react, and frees up your time to focus on your consultancy.
For most consultants, the saving a good accountant generates comfortably outweighs the cost of the service.
At APH, we work with consultants across the UK on a fully remote basis, with fixed monthly fees and no jargon. Distance is no barrier to getting the right support.
“They provide such a personal service and always take time to explain things, making a stressful process completely manageable. Even though I live in Wigan, the service is seamless and accessible, which goes to show how committed they are to their clients no matter where you are based.” — Nichola Croft
You can find out more about our accountants for consultants service here.
Getting started with APH
Whether you’re just setting up as a self-employed consultant or you’ve been trading for years and want to make sure your tax position is as efficient as it could be, we’re here to help.
We offer a free initial consultation with no obligation. You’ll speak to a real accountant, not a salesperson, and come away with a clear picture of what you need and what it would cost.