Basis Period Reform — Now Complete
The transition to tax-year basis is now complete. From 2024/25, all self-employed individuals and partnerships are taxed on profits arising in the tax year (6 April to 5 April), regardless of their accounting date. Businesses with non-5 April year ends should ensure they have made the necessary adjustments.
Class 4 National Insurance (Self-Employed)
- Rate on profits £12,570–£50,270: 6% (reduced from 9% in April 2024)
- Rate on profits above £50,270: 2%
Class 2 National Insurance
Class 2 NIC was effectively abolished from April 2024 — those with profits above the Small Profits Threshold (£6,845) still receive State Pension credit without paying Class 2 separately; it is treated as paid through the Self-Assessment return.
Partnership Taxation
- Each partner pays income tax and NI on their individual share of partnership profits
- Partners can be individuals, companies, or LLPs
- Corporate partners pay corporation tax at 19%–25% on their profit share
- LLP members are taxed as self-employed provided they meet the salaried member rules
Salaried Member Rules (LLPs)
LLP members may be treated as employees for tax purposes if all three conditions are met:
- They receive at least 80% of their remuneration as a fixed/disguised salary
- They have no significant influence over LLP affairs
- Their capital contribution is less than 25% of their fixed salary
Making Tax Digital — Self-Employed & Partners
MTD for Income Tax applies to partnerships where any partner is an individual:
- From April 2026: qualifying income above £50,000
- From April 2027: qualifying income above £30,000
- From April 2028: qualifying income above £20,000
Four quarterly digital returns plus a final declaration will be required. Act now — contact Rob Tax Solutions to get your bookkeeping MTD-ready.
Self-Assessment Payment on Account
Self-employed taxpayers and partners making payments on account pay:
- 31 January — first payment on account (50% of prior year liability) + any balancing payment
- 31 July — second payment on account (50% of prior year liability)
