None of this matters until you make a sale.
Until then, tax, structures and spreadsheets are fiction.
We’re not accountants or financial advisers, and tax rules change.
This guide is correct for the 2026/27 UK tax year (6 April 2026 to 5 April 2027) and was last checked against GOV.UK in late 2026.
Use it as your starting point and get professional advice before you act.
Want the latest numbers? Every section below links to the official GOV.UK or HMRC page, so you can jump straight there and check the current rates.
Start with your relationship with money
Most of us were never taught about money. We never learned how to talk about it. So this is as much about how you think as what you do.
Chaos kills passion. If your money is chaotic, it will drain the joy out of what you’re building. Business bank accounts, accounting software and AI aren’t there to replace you. They’re there to help you run your business effectively.
Top Tip: Keep your personal and business money apart: separate accounts, separate systems.
Your money system: in, out, profit
Money in. Sales.
Money out. Expenses.
Profit. What’s left, and what you’re taxed on.
Spend £30 making £100 of sales, and your profit is £70.
You’re taxed on the £70, not the £100.
Turnover is vanity. Profit is sanity. Know your profit throughout the year, not just when the bill arrives. And remember: paying tax is a good thing. It means you’re making money.
Cash flow is the real killer
The number one killer of small businesses isn’t a lack of customers; it’s cash flow. Spending money to deliver the work, then waiting months to be paid. One company took 16 months to pay us for a course. That’s why now, we don’t start work until at least half the money has landed.
A cupcake maker on one of our courses took an order for 200 cupcakes from a car dealership, baked them all, and turned up with the cakes.
Nobody was there.
She hadn’t taken a deposit. She never made that mistake again.
Money in: get paid
Customers pay by invoice, online or card, or cash.
Try to pick one main method.
– Agree it upfront. Never send a surprise invoice.
– Number every invoice and include the legal details: your name (and any business name), your address, your customer’s name and address, what you’re charging for, the invoice date and the date of the work, the total owed, and VAT if you’re registered. GOV.UK has the full list of what you need to include.
– Ask for 100% upfront, or a deposit that at least covers your costs. Say in writing what happens to it if they cancel.
– Have a cancellation policy. Draft one with AI or search for a template on Google, then proofread it.
– Capture everything, digitally, and chase what’s unpaid.
Money out: expense everything you genuinely can
Every allowable expense lowers your profit and your tax bill. Most new businesses claim too little. HMRC says you can claim costs related to business purchases, and for things you use for both work and home, only the business share.
Our rule of thumb: would I have spent this if I didn’t run this business?
If not, it’s a business expense. Then apply the Duck Principle:
If it looks like a duck, it’s probably a duck…
If you’re not sure you can expense it, you probably can’t.
– Know what you can claim. Office costs, travel, clothing, staff, stock, financial costs, premises, marketing, subscriptions, and training related to your business. Working from home, you can claim a reasonable share of things like heating, electricity and internet.
See HMRC’s full list.
– Track your mileage. For 2026/27, the flat rate is 55p a mile for your first 10,000 business miles in a car or van, then 25p (motorcycles are 24p). It’s for business journeys, so your regular commute doesn’t count. Parking and train fares can be claimed on top. Choose the flat rate for a vehicle, and you stick with it for that vehicle. Log the date, route, reason and miles.
Check the current rates.
– Keep your records. Keep proof of your sales and expenses: receipts, invoices and bank statements, ideally digitally so you can find them. Sole traders keep records for at least five years after the 31 January filing deadline. Limited companies keep them for six years.
Business records on GOV.UK.
– Claim pre-trading costs. Running costs from up to seven years before you started trading can often be claimed on your first return, as long as they’d have been allowable once you were trading.
HMRC’s guidance on pre-trading costs.
– Use a dedicated account or card, one that you’ll actually use.
The monthly finance meeting
Book it now: recurring, at least monthly, with yourself, a partner or a fellow rebel. The agenda: check in with your mindset, review the numbers, chase outstanding invoices, catch missed expenses, log mileage and receipts, forecast the quiet months, think about growth and wealth, then write an action list and do it before you leave.
When will your first finance meeting be?
Choose your business structure
Start with the simplest one that works. It’s easier to move up than to come back down.
– Sole trader: just you, one tax return a year, no accountant needed. The best place to start for most people.
– Limited company: its own legal person, with Corporation Tax, more paperwork and often an accountant. It tends to make sense as profits grow, or if you already earn a lot from a job.
– Partnership: shared profits and shared responsibility for debts. Each partner is taxed on their own share, and the partnership files its own return. Get an agreement in writing. Setting up a partnership.
– CIC, social enterprise or charity: built for social purpose, with much more paperwork. You can still do good as a sole trader.
Your first £1,000: The Trading Allowance
As an individual, you can earn up to £1,000 a year from trading and often not need to tell HMRC at all. Think of it as your mini experiment fund. Try something, decide it’s not for you, close it, and there’s nothing more to do.
– It’s based on your gross income: your sales before any expenses, not your profit.
– Go over £1,000, and you must register for Self Assessment. You then deduct either the £1,000 allowance or your actual expenses, whichever saves you more tax. You can’t do both.
– You can’t use it on income from a company you own or control, from a partnership you’re part of, or from your employer.
– Even under £1,000, you must keep records of your income: invoices, bank statements or a simple spreadsheet will do.
– You may still need to register if you want to claim a loss, pay voluntary Class 2 National Insurance, or claim Tax-Free Childcare or Maternity Allowance.
More on GOV.UK: Tax-free allowances on trading income
How a sole trader is taxed
These are the 2026/27 bands for England, Wales and Northern Ireland. Scotland sets its own income tax bands, so check the Scottish rates.
Up to £12,570: 0% (your Personal Allowance)
£12,571 to £50,270: 20%
£50,271 to £125,140: 40%
Over £125,140: 45%
This is marginal, not flat. Only the slice of profit inside each band is taxed at that rate. Crossing £12,570 doesn’t make all your profit 20%.
Let’s test a real-world example: £30,000 profit
The first £12,570 is tax-free.
The other £17,430 is taxed at 20%: £3,486.
Class 4 National Insurance is 6% of that same £17,430: £1,045.80.
Total tax: £4,531.80.
That’s about 15% of the profit. Not 20%.
National Insurance for sole traders comes in two classes.
Class 4 is 6% on profits between £12,570 and £50,270, and 2% above that.
Class 2: if your profits are £7,105 or more, it’s treated as paid for you, which protects your State Pension record. Below £7,105 you can choose to pay it voluntarily, at £3.65 a week in 2026/27. You stop paying Class 4 from 6 April after you reach State Pension age.
More on GOV.UK: Income Tax rates and Personal Allowances and Self-employed National Insurance rates
Put tax aside as you go
Don’t let your tax bill become the reason you need a loan. Open a separate account and, every time you’re paid, move 20% of it into your tax pot. Live on the rest.
Say you make £40,000 in sales and spend £10,000. Your profit is £30,000, and your tax and National Insurance bill is £4,531.80. Setting aside 20% of your sales gave you £8,000, comfortably more than the bill.
The extra matters more than you’d think. In your first January, you’ll usually pay your bill and a first payment on account towards the next one (more on that below).
In this example, that’s £4,531.80 + £2,265.90 = £6,797.70.
Your £8,000 pot covers it.
This is a Rebel tip, not a rule. As your profit grows into higher bands, you’ll need to set aside more. And if you’re VAT registered, the VAT you charge goes in its own pot.
More on GOV.UK: Estimate your Self Assessment bill
Self Assessment: when do you pay?
Sole traders pay Income Tax and National Insurance through Self Assessment. The UK tax year runs from 6 April to 5 April.
Why not January to December? We’ve asked. Nobody knows…
5 April: the tax year ends.
5 October: the deadline to register for Self Assessment, if you went over £1,000 or need a return for another reason.
31 January: the deadline to file your online tax return and pay what you owe.
Say you start selling in autumn 2026. That’s the 2026/27 tax year, which ends on 5 April 2027. You’d register by 5 October 2027, then file and pay by 31 January 2028. So if you sell something now, there’s plenty of time. Put the dates in your diary anyway.
Payments on account: the first-year surprise
Here’s the bit that catches people out. If your bill is £1,000 or more, HMRC asks you to pay towards next year’s tax in advance, in two instalments, on 31 January and 31 July. Each instalment is half of the tax you owed for the year just ended.
It starts with your very first return. In your first January, you pay your full bill and the first payment on account:
Your 2026/27 tax and National Insurance bill: £4,531.80
First payment on account (half of that): £2,265.90
Total due on 31 January 2028: £6,797.70
Second payment on account, due 31 July 2028: £2,265.90
You don’t pay on account if last year’s bill was under £1,000, or if you’d already paid more than 80% of it another way, such as through your tax code. And if you know your profit is dropping, you can ask HMRC to reduce your payments on account.
More on GOV.UK: Self Assessment deadlines and Payments on account
Put the dates in your diary now!
Making Tax Digital: the change coming for sole traders
HMRC is moving Income Tax online.
It’s called Making Tax Digital for Income Tax, and it started on 6 April 2026. If it applies to you, you use compatible software to keep digital records, send HMRC a summary every three months, and submit your tax return through the same software.
Whether it applies depends on your qualifying income: your total income from self-employment and property before expenses (your turnover), taken from your tax return for the previous year.
Over £50,000 in 2024/25: you had to start on 6 April 2026.
Over £30,000 in 2025/26: you start on 6 April 2027.
Over £20,000 in 2026/27: you start on 6 April 2028.
– Who it covers. Sole traders and landlords registered for Self Assessment. You need to have filed a return first, so a brand new business isn’t caught straight away. Your share of a partnership’s profit doesn’t count towards the threshold, though partnerships will need to join in future. Work out your qualifying income.
– The quarterly updates. They’re summaries of your income and expenses, not tax returns, and HMRC doesn’t receive your individual receipts or invoices. The deadlines are 7 August, 7 November, 7 February and 7 May. See the dates and periods.
– The penalties. HMRC isn’t applying penalty points for late quarterly updates in 2026/27. After that, four penalty points mean a £200 penalty.
– The software. HMRC doesn’t provide it. Some software creates your records for you. Other “bridging” software connects to records you already keep in a spreadsheet. Choose before you sign up. HMRC’s software guidance.
Not sure if it applies to you? HMRC has a quick online checker. Under the threshold? Starting with digital records now means no scramble later.
More on GOV.UK: Find out if and when you need to use Making Tax Digital
If you’re a limited company
A limited company is its own legal person, so it has its own tax. Corporation Tax is charged on the company’s profit:
£50,000 or less: 19%
£50,000 to £250,000: a sliding scale (marginal relief), from 19% up to 25%
Over £250,000: 25%
Nobody works the sliding scale out in their head. On £100,000 of profit, for example, the bill is £22,750, an effective rate of 22.75%. HMRC has a marginal relief calculator for exactly this, and software and accountants do it for you.
It’s due nine months and one day after your accounting year ends, and your Company Tax Return is due within 12 months. You can prepare and file the return yourself or use an accountant. Your company’s banking must be separate from your own.
Remember that profit left in the company isn’t yours yet. When you take money out, as salary or dividends, you pay personal tax on it. How to take money out of a limited company.
More on GOV.UK: Corporation Tax rates and Pay your Corporation Tax bill
VAT: The one tax on turnover
VAT is the exception to the rule. If your taxable sales go over £90,000 in the last 12 months, or you expect them to in the next 30 days, you must register. Below that, it’s optional.
Once registered, you charge customers VAT (the standard rate is 20% on most goods and services, with some at 5% or 0%), claim back the VAT you spend, and pay HMRC the difference. The VAT you charge isn’t yours, so put it in its own pot.
More on GOV.UK: Register for VAT and VAT rates
Do you need an accountant?
Not as a sole trader. Limited companies have more to file, so most use one, though you can prepare your own Company Tax Return. A bookkeeper keeps the books; an accountant looks at the bigger picture and files your accounts. Find one you like, because a good accountant is like inviting someone round for dinner on a regular basis. Make some money first, then hire one.
The other legal bits
There’s more to the legal side than tax.
Here’s three things to think about before you grow:
1. Public liability insurance if you deal with the public.
Professional indemnity if you give advice.
Cyber insurance for data breaches and malicious attacks.
Employer’s liability is different: you must have it as soon as you employ someone (family-only is an exception), with at least £5 million of cover, and the fine is £2,500 a day without it. Employers’ liability on GOV.UK.
2. Your original work, like photos, writing and designs, is protected automatically.
3. Terms and conditions. Write down how you work: prices, payment terms, deposits, cancellations and what happens if something goes wrong. Use AI as a starting point, then proofread it.
Why we’re so keen on cash
On 16 March 2020, a call came in from one of our biggest clients. Then another. Then another.
Roughly half a million pounds of Rebel courses vanished in a day due to the pandemic.
We’re still here because we had enough cash in the bank to last more than a year. It bought us the time to redesign the business. Business is about having money, not owing money.
Simple = Sanity.
Don’t try to learn all of this inside out. You’ll go insane. Make your system simple enough to repeat, revisit it every month, and ask for help with the parts that aren’t your strong suit. If you’re struggling, someone else is too.
Your Action:
- Plan your regular finance meeting
- Decide which structure you’ll start with
- Run your mini experiment
No sales yet? That doesn’t change the mission. Business should be fun; be an experimenter. Then go and make a sale.
Additional resources
GOV.UK: Income Tax rates and Personal Allowances
GOV.UK: Self-employed National Insurance rates
GOV.UK: Tax-free allowances on trading income
GOV.UK: Self Assessment deadlines
GOV.UK: Making Tax Digital for Income Tax
GOV.UK: Check if you need Making Tax Digital
GOV.UK: Expenses if you’re self-employed
GOV.UK: Business records if you’re self-employed
