The long version of the Self-employment page for limited company directors

This article provides a summary of the long version of the Self-employment page of the Self Assessment tax return if you’re required to complete it and you have a limited company FreeAgent account type.

You’ll only need to complete the Self-employment page when you’re a limited company director if you have a self-employed business in addition to the income that you receive from the company of which you’re a director. If you don’t have an additional self-employed business, you won’t need to complete this page.

There are two different versions of the Self-employment page: the short version and the long version. You can find out more in HMRC's guidance on the short and long versions of this page.

We are not authorised by HMRC to provide accounting or tax advice. Therefore, FreeAgent’s Support team cannot advise you on how to fill in your tax return correctly or check your figures to see if they are correct, unless they have been calculated by the software. If you’re unsure whether a figure on your tax return is right, please speak to your accountant or to HMRC.

Who should use the long version?

If you have a self-employed business in addition to your income as a limited company director, you're preparing accounts for a full accounting year and your sales during that period were over £85,000, you should use the long version of the Self-employment page. If your sales during that period were under £85,000, you’re usually able to use the short version.

If your self-employed business is preparing accounts for less than a full accounting year and your annualised sales were over £85,000, you need to use the long version.

Annualised sales figures are calculated as a proportion of your sales during the accounting year. For example, if you began trading on 1st January with an accounting year end date of 5th April, and you made £30,000 sales during that time, your annualised sales would be calculated as £30,000 x 12/3 = £120,000.

You’ll need to use the long version if you are using the averaging method for farmers, market gardeners, writers and artists, or your taxable self-employed period, known as the basis period, is not the same as your accounting period and you are affected by basis period reform. Find out more about basis period reform in the following HMRC guidance. If you have unused overlap relief which you need to use due to basis period reform, the 2023 to 2024 tax year is the final year you can use your overlap relief.

If you've been presented with the long version but want to fill in the short version, you can switch at the top of the page.

An overview of the long version of the Self-employment page in FreeAgent

Select ‘Yes’ to ‘Do you need to fill out the Self Employment section?’ and enter the amounts of any income and costs for the self-employed business. Remember that this page relates only to your self-employed business. Do not include anything on this page that relates to the limited company of which you’re a director.

Basis period reform

From the 2024/25 tax year, sole traders will be required to include profits on their tax returns for the tax year, rather than their accounting year, in accordance with the basis period reform rules.

There is a transition year in 2023/24. During the transition year you’ll be required to calculate your standard profit. This is usually the profit you would have included on your tax return if basis period reform had not happened - typically the profit for your accounting year.

Next, you’ll calculate the profit for the rest of the tax year up to 5th April 2024. This is known as the transition profit.

From 2024/25 onwards, if your business’s accounts are not prepared up to the end of the tax year (5th April, or by concession 31st March or any of the first four days in April), HMRC requires the income and expenses from two accounting years to be apportioned in order to calculate accurate figures for a single tax year. You can find out more information about how to calculate this in HMRC’s guidance.

Basis period reform transition year 2023/24

During the transition year, 2023/24, you’ll be taxed on the profits of the ‘standard part’ and the ‘transition part’ of your basis period.

Your standard part is the 12 month period beginning immediately after the end of your basis period for tax year 2022/23. Your transition part is the period that begins immediately after the end of the standard part and ends on 5 April 2024.

For example, in the 2023/24 tax year, a business with a December 31st year end will pay tax on:

• standard profit (for 1st January 2023 - 31st December 2023)
• transition profit (for 1st January 2024 - 5th April 2024)

If the tax year overlaps with two accounting years and the end date of the second accounting year hasn't passed when you file your tax return, you need to submit provisional figures to HMRC on your Self Assessment tax return.

As per HMRC guidance, if you’re affected by basis period reform you may have more than one set of accounts for the basis period. You will need to fill in boxes 1 to 65 and 83 to 99 as appropriate on separate ‘Self-employment (full)’ pages for each set of accounts. Boxes 66 to 82 and 100 to 103 should only be completed for the most recent set of accounts. You can add supplementary self assessment pages by selecting ‘add a supplementary page’ at the top of the page. This will add a supplementary ‘Self-employment (full)’ page below the pages that are already showing and will not include boxes 66 to 82 and 100 to 103.

Business details

Enter your self-employed business name in box 1 of the ‘Business details’ section, a description in box 2, the first line of the business address (unless you work from home) in box 3 and the postcode of your business address in box 4. Select whether any of your business’s details have changed in the last 12 months in box 5.

Accounting details

Enter the date that your accounting period started in box 8 and the date that your accounting period ended in box 9.

If any special arrangements apply or if you reported any information about this year's profit on last year’s tax return, select ‘Yes’ in the relevant box. Otherwise, select ‘No’.

In box 10, select whether you have used the cash basis in preparing your accounts. If you used the cash basis, select ‘Yes’. If you used the accruals basis, select ‘No’.

Income

Box 15 is for turnover - enter the income your self-employed business has earned during the year. This figure should exclude bank interest, which you need to enter on the Main Return page.

Use box 16 to enter any other income your self-employed business received during the tax year.

Amounts entered in box 16 are included in your profit for tax calculation.

Costs

On the long Self-employment page, enter all your self-employed business costs, both those that are 'allowable' for tax (i.e. costs that can be used to reduce the amount of profit that's subject to tax) and those that are ‘disallowable’ for tax (i.e. costs that you can’t use to reduce your taxable profit) in boxes 17-30.

Box 31 is the sum of boxes 17-30.

Enter any disallowable costs in the relevant categories in boxes 32-45. If a cost is 'disallowable', that means it's not allowable for tax relief and you can't use that cost to reduce the amount of profit that you pay tax on.

Box 46 is the sum of boxes 32-45.

Capital allowances

If you need to enter any capital allowances for your self-employed business, select ‘Yes’ to ‘Do you want to claim any tax allowances (capital allowances)?’ and enter the allowances into boxes 49-59. There are complex rules governing what you can claim for different assets. If you're not sure what figure you can claim, please ask your accountant.

CIS deductions

If you're a subcontractor in the construction industry in your self-employed business, enter the tax that was taken off your earnings in the tax year by your contractors into box 81. This is because HMRC takes this tax into account when working out how much tax you should pay this year.

Balance sheet

The balance sheet boxes, boxes 83-99, are optional. They won't affect the amount of tax you pay so the choice is yours whether to fill in these boxes.

Class 2 National Insurance

Up until 6th April 2024, if your self-employed profits are over the Lower Profits Limit, you have to pay Class 2 National Insurance contributions (NICs). Class 2 NICs are usually a flat rate per contribution week or partial contribution week that you're self-employed (unless you're a share fisherman).

A contribution week is defined as a period of seven days starting from a Sunday (just after midnight) to the following Saturday (just before midnight). For example, if you started self-employment on Saturday 11th February 2023, you would be liable for Class 2 NICs from Sunday 5th February 2023. If you began self-employment on Sunday 12th February 2023 however, you would be liable for Class 2 NICs from that Sunday.

Once your Class 2 NIC liability has been established, it will continue for as long as you are ordinarily self-employed. This means that you will remain liable for Class 2 NICs during holiday weeks, weeks when you do not do any self-employed work and weeks when you do not earn anything from self-employment.

If you cease self-employment, your liability to pay Class 2 NICs will end on the Saturday of the week in which you ceased to be self-employed. For example, if you gave up self-employment on Thursday 9th March 2023, your liability would have ended on Saturday 11th March 2023 and you would still have had to pay Class 2 NICs for that whole week.

If your self-employment profits are over the Lower Profits Limit, FreeAgent will automatically calculate your Class 2 NI liability for you based on the number of contribution weeks in the tax year in accordance with HMRC guidance, as shown below. However, you can override this amount if you know it to be incorrect e.g. if you started self-employment mid-year.

If your self-employment profits are below the Small Profits Threshold, you can still volunteer to pay Class 2 NICs. If you want to do this, select ‘Yes’ in the section shown above. Please note that from 6th April 2024, only sole traders with profits below the Small Profits Threshold will be able to volunteer to pay Class 2 NICs. Everyone with profits above this threshold will be treated as having paid Class 2 NICs but will not have to, or be able to, pay them.

Class 4 National Insurance exemption

Most self-employed individuals have to pay Class 4 National Insurance contributions (NICs). However, if you're under 16, over state pension age, or not resident in the UK for tax purposes as at the start of the tax year in question, you're exempt from paying Class 4 NICs. If this applies to you, select 'Yes' to question 101.

You may sometimes need to adjust the profits on which you're paying Class 4 NICs (e.g. if you've used a loss to claim back some tax and the loss is still available to save you Class 4 National Insurance). Check with your accountant to find out whether this applies to you.