Do self employed people get a tax code?

Find out whether self employed people have a tax code in the UK. Understand how tax codes work, how self employment is taxed, and what to do if you also have PAYE income.

When you start working for yourself, it can be confusing to understand how your tax works. Employees are used to having a tax code, which determines how much Income Tax is deducted from their wages under the PAYE (Pay As You Earn) system. But if you are self employed, the process is different.

In short, self employed people do not have a tax code for their business income. Instead, they pay tax through the Self Assessment system, which means calculating their own income and expenses each year and paying the correct amount of tax to HMRC.

However, there are situations where a self employed person might still have a tax code—if they also have employment income or certain benefits.

This article explains how tax codes work, why self employed people usually don’t have one, and when HMRC might issue a tax code in special cases.

What is a tax code?

A tax code is a series of numbers and letters used by HMRC to tell employers and pension providers how much Income Tax to deduct from someone’s pay before it reaches them. It reflects a person’s tax-free allowance (known as the Personal Allowance) and any adjustments for benefits or underpaid tax.

For example, a tax code of 1257L means the person can earn £12,570 tax-free in a year, with tax deducted on income above that amount.

Tax codes are used only for income taxed under PAYE, such as:

  • Employment wages and salaries.

  • Company pensions.

  • Some state benefits.

Self employed people do not pay tax under PAYE, which is why they normally don’t have a tax code for their business income.

How tax works for self employed people

When you are self employed, you are responsible for declaring your own income and paying the right amount of tax to HMRC. This is done through the Self Assessment process.

You must:

  1. Register as self employed with HMRC.

  2. Keep records of income and expenses.

  3. Submit a Self Assessment tax return each year.

  4. Pay any Income Tax and National Insurance due.

Instead of a tax code, HMRC calculates your tax based on your total profit—the difference between your income and allowable business expenses.

Why self employed people do not have tax codes

Tax codes are designed for people whose employers handle tax deductions automatically. Since self employed people do not have an employer, there is no one to apply a tax code to their income.

Instead, self employed individuals pay tax in two main ways:

  • Income Tax on business profits.

  • National Insurance Contributions (NICs) Class 2 and Class 4, based on profit levels.

These payments are made directly to HMRC, usually by 31 January each year, after submitting the Self Assessment return.

When self employed people might have a tax code

While self employed income itself doesn’t have a tax code, there are situations where you might still have one.

1. If you have both employment and self employment

Many people work part-time as employees while running a business on the side. In this case:

  • Your employer uses your tax code for PAYE income.

  • Your self employed income is taxed separately through Self Assessment.

Your tax code applies only to your wages from employment, not your business profits. HMRC will combine both sources when calculating your total tax bill, but only PAYE income uses a code.

2. If you receive a pension or other taxable income

If you receive a private or company pension, it will have its own tax code. HMRC adjusts this code to reflect your tax-free allowance and any other income you have declared.

Your self employed income will still be taxed through Self Assessment, but HMRC may adjust your pension tax code to collect some or all of your tax due automatically.

3. If HMRC uses your code to collect unpaid tax

Sometimes, HMRC adjusts your PAYE tax code (from a job or pension) to collect tax owed on self employed income. This is known as coding out underpayments.

For example, if you owe less than £3,000 in tax and still have PAYE income, HMRC may reduce your tax code to collect the money automatically over the next tax year.

How tax is calculated for self employed people

Instead of relying on a tax code, HMRC calculates your tax bill based on the information in your Self Assessment return. You pay tax on your profit, which is your total business income minus allowable expenses.

For the 2024/25 tax year, the Income Tax bands for England, Wales, and Northern Ireland are:

  • 0% on income up to £12,570 (Personal Allowance).

  • 20% on income from £12,571 to £50,270.

  • 40% on income from £50,271 to £125,140.

  • 45% on income above £125,140.

In Scotland, different rates and bands apply.

You will also pay:

  • Class 2 National Insurance if profits exceed £12,570.

  • Class 4 National Insurance at 9% on profits between £12,570 and £50,270, and 2% above that.

These figures are all reported and paid through your Self Assessment.

How HMRC collects self employed tax

Self employed tax payments are made directly to HMRC, not deducted automatically. There are two main deadlines each year:

  • 31 January: Pay your tax for the previous year and make your first payment on account for the current year.

  • 31 July: Make your second payment on account (if applicable).

If your tax bill is large or includes both employment and self employed income, HMRC may adjust your PAYE tax code to collect some of it automatically in future years.

What to do if you think your tax code is wrong

If you have employment or pension income alongside your self employment and you believe your tax code is incorrect, you can check it using your Personal Tax Account on the HMRC website.

You can also contact HMRC directly to correct errors. Keeping your records accurate and filing your Self Assessment on time ensures HMRC applies the right tax code to any PAYE income and calculates your self employed tax correctly.

The role of an accountant

Accountants can help self employed people manage their tax affairs efficiently by:

  • Preparing and filing Self Assessment tax returns.

  • Calculating Income Tax and National Insurance.

  • Advising on allowable business expenses.

  • Helping to budget for future tax payments.

  • Checking that PAYE tax codes are accurate for those with mixed income.

Professional support ensures you stay compliant, avoid underpayment, and make the most of any available deductions or reliefs.

The bottom line

Self employed people do not have a tax code for their business income because they pay tax through Self Assessment rather than PAYE. However, if you also have employment, pension income, or unpaid tax, you may still have a tax code linked to that income.

Understanding how the two systems work together helps you avoid confusion and stay on top of your tax obligations. By keeping detailed records and seeking professional advice where needed, you can manage your self employed taxes confidently and accurately every year.