Why This Year Feels Different
Every April, the new tax year brings fresh rules, rates, and thresholds. For employees on PAYE, most of it happens automatically behind the scenes. But if you’re self-employed, these changes directly affect your invoices, take-home pay, and how much you need to set aside for HMRC.
The 2025/26 tax year comes with its own updates—some subtle, some significant. At Rothstone Accountants, we know that missing a small detail (like a change in Class 2 NI) can lead to bigger headaches later. That’s why we guide self-employed clients through every threshold, every allowance, and every opportunity to save tax.
Income Tax Bands & Allowances
📊 Table 1: Income Tax Bands 2025/26 (England, Wales, NI)
| Band | Income Range | Rate |
|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Notes:
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The personal allowance (£12,570) is frozen again, meaning more people get dragged into higher tax as incomes rise.
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Scotland uses slightly different bands (worth checking if you’re north of the border).
👉 Rothstone tip: We help self-employed clients plan around these bands—splitting income with a spouse, timing dividends, or using pension contributions to keep more income in the lower brackets.
National Insurance (NI) for the Self-Employed
If you’re self-employed, NI works differently:
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Class 2 NI: Flat weekly contribution (gives you State Pension entitlement).
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Class 4 NI: Percentage of profits (like income tax, but for NI).
📊 Table 2: Self-Employed NI 2025/26
| NI Type | Thresholds | Rate |
|---|---|---|
| Class 2 | Profits above £12,570 | £3.45 per week |
| Class 4 | £12,570 – £50,270 | 8% |
| Class 4 | Over £50,270 | 2% |
👉 Rothstone tip: Many clients forget that Class 2 NI counts towards your State Pension. If profits are under £12,570, it may still be worth paying voluntarily to protect future benefits—we’ll check this for you.
Allowances for the Self-Employed
Being self-employed doesn’t just mean paying tax—you also get allowances that can reduce your bill.
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Trading Allowance (£1,000): If your income from self-employment is less than £1,000, you don’t need to register or pay tax.
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Marriage Allowance: Transfer £1,260 of unused personal allowance to a spouse if eligible.
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Annual Investment Allowance (AIA): Claim up to £1m on plant/machinery in the year of purchase.
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Work-from-home expenses: Flat rate (£10–£26 a month depending on hours) or actual costs (heating, internet, etc.).
📌 Example:
We advised a freelance designer earning £38,000. By correctly claiming home office expenses and pension contributions, we reduced their taxable income to £34,500—saving £750 in tax.
VAT: Do You Need to Register?
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VAT threshold 2025/26: £90,000 turnover.
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If you go over it in a rolling 12 months, you must register.
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Voluntary registration can also be smart—especially if you sell to VAT-registered businesses (you reclaim input VAT).
👉 Rothstone tip: We run VAT forecasts for clients. Many self-employed people only realise they’ve passed the threshold months later, triggering penalties. With us, you’ll know in advance.
How Rothstone Accountants Help You Stay Ahead
Here’s what we do for our self-employed clients every year:
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Tax return filing: We handle the numbers and deadlines.
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Personalised forecasts: So you know how much to set aside for tax and NI.
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Allowance optimisation: Making sure you claim every expense and relief available.
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VAT advice: Registering only if it benefits you (and helping you plan if it doesn’t).
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Cashflow planning: Helping you balance tax bills with day-to-day income.
📌 Case Study:
One client, a self-employed IT contractor, came to us after underestimating their tax bill by £6,000 the year before. We built a forecast for the year ahead, identified pension contributions to reduce their taxable income, and set up quarterly reviews. Not only did they avoid another shock—they saved £2,400 in tax.
The 2025/26 tax year brings the same core thresholds, but “frozen allowances” and rising income mean more self-employed people will feel the pinch.
The difference between scrambling at the last minute and staying in control is having a partner like Rothstone Accountants. We don’t just file your return—we help you forecast, save, and plan so your self-employment stays profitable and stress-free.
👉 Ready to take control of your 2025/26 tax year? Visit www.rothstone.uk and let Rothstone Accountants keep your finances on track.
