Planning to become a self-employed cleaner? Or are you already registered as self-employed but want to find out how the tax side of things works? Read this guide to find out more about tax for self-employed cleaners including how your earnings are taxed, what expenses you can claim and how tax returns work.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
How Taxes Work for Self-Employed Cleaners
When you choose to work as a self-employed cleaner you’re treated as working for yourself rather than being employed by your cleaning agency or client. Being self-employed means that you:
- Are responsible for finding your own work, no one is obligated to give you work;
- Decide whether you want to accept or decline a job;
- Need to pay for your own transport, mobile phone and equipment;
- Will not receive sick pay or holiday pay;
- Make sure you have the right qualifications to operate;
- Take out your own insurance.
If you have ever received a payslip you’ll notice that deductions for income tax and national insurance are made on your behalf before you get paid. However, when you go self-employed you are responsible for working out how much tax and national insurance you owe, paying them over to HMRC in accordance with the rules of self-assessment.
What is Self-Assessment?
Self-assessment is the process created by HMRC that allows anyone who receives untaxed income to declare it to the government and pay any tax due.
As a self-employed cleaner, everything you get paid has no tax deducted from it. It’s your responsibility to tell HMRC about it, work out how much tax you owe and pay it over. The way you do this is by registering for self-assessment and getting a UTR number so you can fill in a tax return.
3. What is a Tax Return?
A tax return is a form issued by HMRC (also known as an SA100). It contains lots of different sections and boxes that you need to fill in to declare your earnings. Once completed, HMRC will then calculate how much tax you owe ready for you to pay them.
You need to fill in your tax return by the 31 January each year summarising all your earnings for the previous tax year. The tax year runs from 6 April to 5 April each year. So a tax return due by 31 January 2023 would contain earnings between 6 April 2021 to 5 April 2022.
4. How Much Tax Do You Pay as a Self-Employed Cleaner?
When you’re self-employed you’ll pay income tax, Class 2 and Class 4 national insurance on the profits as a self-employed cleaner. Profit means all your income minus expenses you can claim as a tax deduction.
Income tax starts at 20% on all your income (not just from cleaning) over £12,570 and 40% over £50,270. Class 2 National Insurance is paid as a set weekly amount when your income goes over £6,725 and Class 4 is worked out as 9% on your earnings over £9,880.
You can read more about self-employed tax here, see examples of how it’s calculated and when you pay it, including if you’re employed and self-employed.
5. Tax Deductions for Self-Employed Cleaners
Claiming for allowable business expenses is the easiest way to reduce your tax bill when you’re self-employed. Typically, most of the things that you pay for as a cleaner will be tax-deductible. For example:
- Cleaning products and materials;
- Website design, build and hosting
- Licences, software and subscriptions
- Products you sell to your clients
- Branded or safety clothing and uniforms
- Training and courses
- Use of home as an office
- Travel and mileage
- Payment processing fees
- Legal fees
- Accountants fees
- Bank charges for a business bank account
There may be some expenses you pay for that you use personally and for work, such as your mobile phone. In these cases, you can only claim a portion as a business expense. So, say you use your mobile phone for 60% work and 40% personal, then can claim 60% of the total bills to put against your taxes.
While most things you pay for as part of being a self-employed cleaner are tax write-offs, there are some things you may pay for that you cannot deduct against your taxes. This includes things like:
- Fines and penalties eg: parking fines
- HMRC interest and penalties
- Training and courses for new skills
- Food, except in certain circumstances
- Personal expenses
6. How to Register as a Self-Employed Cleaner
The quickest and easiest way to register to work for yourself with HMRC is to register as self-employed. You can choose to do this once your income (not profit) goes over £1,000 during a tax year if you like by taking advantage of the £1,000 trading income allowance.
The deadline for registering is the 5th October following the end of the tax year you started working as a cleaner or your earnings go over the £1,000 limit.
There are other business structures out there including a Limited Company which may offer better tax savings depending on your earnings. Read this guide to find out about more popular UK business structures.