Self-Employed in the UK as an American: Self Assessment, National Insurance and SE Tax

As a self-employed American in the UK, you register with HMRC by 5 October after your first trading year, file Self Assessment with the SA103 self-employment pages and pay Class 4 National Insurance. You also report the same business on Schedule C of your US return, where a certificate of coverage removes US self-employment tax. Self employed Self Assessment for a UK American is two filings for one business, and the order you do things in matters.

This guide is for an American who lives in Britain and runs a sole trade here: a photographer in Leeds, a consultant in Edinburgh, a furniture maker in Bristol. If you are instead working remotely from the UK for American clients and want to know which country taxes the fees, start with our guide to contractor tax for US/UK remote work. Here we deal with the practical set-up: registering, which UK pages you file, National Insurance, Making Tax Digital, and how the US side is built around it.

What does self-employed Self Assessment in the UK involve for an American?

Self-employed Self Assessment in the UK works the same for an American as for anyone else: HMRC looks at what you do, not your passport. You register as a sole trader (a "sole proprietor" in US terms), receive a Unique Taxpayer Reference, keep records for each tax year running 6 April to 5 April, and file a return by 31 January after the year ends.

Registering by 5 October

GOV.UK says you must tell HMRC by 5 October 2026 if you need to complete a tax return for the 2025/26 tax year, which ran from 6 April 2025 to 5 April 2026 (GOV.UK, register as self-employed). Late registration can lead to a penalty. Registering also sets up your Class 2 and Class 4 National Insurance record. If you have just arrived, our guide to registering for Self Assessment by 5 October covers the routes, and the UTR number guide for Americans in the UK explains how long the reference takes.

The trading allowance

Very small side businesses may not need to register at all. The trading allowance gives up to £1,000 a year of gross trading income tax free; above £1,000 you must register, and you can either deduct the £1,000 allowance or your actual expenses, but not both (GOV.UK, trading and property allowances). For a real business with real costs, actual expenses almost always win.

SA103S or SA103F?

Your profit goes on the self-employment supplementary pages of the SA100 return. HMRC's notes for 2025/26 say to fill in the short pages, SA103S, "if your turnover was less than £90,000 (or would have been if you had traded for a full year)" (GOV.UK, SA103S). The £90,000 figure is the VAT registration threshold. Above it, or where your affairs are more complex, you use the full pages, SA103F (GOV.UK, SA103F). Either way, keep full records of every expense behind the totals. For the rest of the return, see our walkthrough of UK Self Assessment for Americans.

National Insurance for a self-employed American: Class 4 and Class 2

Class 4 National Insurance is the main social security charge on UK self-employed profits. For tax year 2026/27, GOV.UK sets it at 6% on profits between £12,570 and £50,270 and 2% on profits above £50,270 (GOV.UK, self-employed National Insurance rates). It is collected through the Self Assessment return with your income tax, not paid separately.

Class 2 National Insurance stopped being a compulsory payment from April 2024. For 2026/27, if your profits are £7,105 or more you are treated as having paid Class 2, which protects your State Pension record without any cash cost. Below that, you can choose to pay voluntary Class 2 at £3.65 a week for 2026/27, ticking the relevant box on the self-employment pages.

One change from 6 April 2026 matters to Americans who may later move back. GOV.UK now says "you cannot pay voluntary Class 2 National Insurance contributions for time abroad"; only the more expensive Class 3 is available for periods outside the UK, and only if you have 10 years of continuous UK residence or 10 years of qualifying contributions (GOV.UK, voluntary contributions if you live or work abroad). Years you trade in the UK are the cheapest way to build UK State Pension entitlement, which our guide to the UK State Pension and US Social Security explains in detail.

Payments on account, basis periods and Making Tax Digital

Payments on account

Payments on account are advance instalments towards next year's bill. Each one is half of the previous year's Self Assessment tax, due by 31 January and 31 July, unless last year's bill was under £1,000 or more than 80% of your tax was collected at source (GOV.UK, payments on account). Payments on account include Class 4 National Insurance. For a new sole trader this produces the first-year cash shock: on the first 31 January you pay the whole of year one's bill plus half of it again as the first instalment for year two.

Basis period reform

Since 2024/25, sole traders are taxed on the profits of the tax year itself, not on an accounting period ending in it. GOV.UK describes the change as moving trading income to a tax year basis from 2024/25, with 2023/24 as the transition year (GOV.UK, basis period reform). A business with an accounting date other than 31 March to 5 April must apportion profits across tax years. For an American starting out, the simplest choice is a 31 March or 5 April year end, which also makes the UK figures easier to translate into the calendar-year US return.

Making Tax Digital for Income Tax

Making Tax Digital for Income Tax (MTD) replaces annual-only record keeping with digital records and quarterly updates. GOV.UK's thresholds are qualifying income over £50,000 in 2024/25 (start 6 April 2026), over £30,000 in 2025/26 (start 6 April 2027) and over £20,000 in 2026/27 (start 6 April 2028) (GOV.UK, MTD eligibility). Qualifying income is self-employment and property income before expenses, so it is turnover, not profit. Quarterly updates are due by 7 August, 7 November, 7 February and 7 May (GOV.UK, quarterly updates).

How does the US tax an American's UK sole trade?

The US taxes a citizen's UK sole trade on Schedule C of Form 1040, in dollars, for the calendar year. The UK tax year and the US tax year never line up, so the same profits are split differently on each return, and your records need to support both.

Schedule C and self-employment tax

US self-employment tax (SE tax) is the self-employed version of the Social Security and Medicare taxes that US employers withhold. The IRS says that for a self-employed US citizen the rules are "generally the same whether you are living in the United States or abroad", and SE tax is due once net earnings reach $400 (IRS Publication 54).

The certificate of coverage

The US/UK totalization agreement (the US name for a social security agreement) stops you paying both. Publication 54 states that self-employed persons subject to dual taxation "will only be covered by the social security system of the country where they reside". A UK-resident American therefore pays UK Class 4 National Insurance and not US SE tax, but the exemption has to be proved. The IRS tells you to "attach a photocopy of the certificate or statement to your Form 1040 each year you are exempt from U.S. self-employment tax" (IRS, self-employment tax for businesses abroad). For someone covered by UK National Insurance, the certificate comes from HMRC; its CA9107 certificate of coverage service lists the USA and accepts self-employed applicants. Apply early in your first year, because the US return cannot claim the exemption without it.

FEIE or foreign tax credit for self-employment income?

For most self-employed Americans in the UK, the foreign tax credit is the better tool, and neither option touches SE tax. The foreign earned income exclusion (FEIE) on Form 2555 can exclude up to $132,900 per person for tax year 2026 (IRS, figuring the exclusion), if you meet the bona fide residence test or are present abroad for 330 full days in 12 consecutive months. The IRS is plain that "the excluded amount will reduce your regular income tax but will not reduce your self-employment tax" (IRS, foreign earned income exclusion).

The foreign tax credit on Form 1116 instead credits the UK income tax paid on the same profits against US tax. Because UK rates are usually at least as high as US rates, it often leaves no US income tax and can build carryovers. Class 4 National Insurance cannot be credited: Publication 514 says "no deduction or credit is allowed" for social security taxes paid to a country with a social security agreement (IRS Publication 514). Our guide to double taxation relief between the US and the UK covers the credit mechanics.

UK and US obligations side by side

The table sets out what each country expects from a UK-resident American sole trader. Figures are for the tax years shown and change each year.

Obligation	UK (HMRC)	US (IRS and FinCEN)
Tax year	6 April to 5 April	1 January to 31 December
Registration	Register as self-employed by 5 October after the first tax year	No separate registration; the business goes on your Form 1040
Business return	SA100 with SA103S (turnover under £90,000 for 2025/26) or SA103F	Schedule C, in dollars
Filing deadline	31 January online (31 October on paper)	15 April, with an automatic 2-month extension to 15 June for those living abroad
Social security	Class 4 at 6% and 2% for 2026/27; Class 2 treated as paid from £7,105 profit	SE tax, removed by attaching an HMRC certificate of coverage
Paying in advance	Payments on account, 31 January and 31 July	Estimated tax if you expect to owe $1,000 or more
Digital reporting	MTD quarterly updates once qualifying income passes the threshold	None equivalent
Double tax relief	Rarely needed for UK-source trading profits	Foreign tax credit (Form 1116) or FEIE (Form 2555)
Bank accounts	No separate reporting	FBAR if UK accounts together exceed $10,000; Form 8938 above its own thresholds

On the last row: FinCEN requires an FBAR when the aggregate value of your foreign financial accounts exceeds $10,000 at any point in the calendar year, due 15 April with an automatic extension to 15 October (FinCEN, FBAR). A sole trader's business account is in your own name, so it counts, and so does any account you have signature authority over. Our FBAR requirements guide covers the detail.

Your first year as a self-employed American in the UK: a timeline

This is the order we work through for an American who starts trading in the UK during 2025/26. Dates assume a start in that tax year.

1. When you start trading: open a separate UK business account, choose a 31 March or 5 April year end, and start digital records that capture both UK tax-year and US calendar-year totals.
2. Early in the first year: apply to HMRC for the certificate of coverage, so it is in hand before the US return is filed.
3. 15 April, 15 June, 15 September and 15 January: make US estimated tax payments if you expect to owe $1,000 or more; for 2026 the Form 1040-ES dates run from 15 April 2026 to 15 January 2027.
4. 15 June 2026: file the 2025 Form 1040 with Schedule C, Form 1116 or 2555 and the certificate attached, using the automatic extension for those abroad; file the FBAR by 15 October 2026 at the latest.
5. By 5 October 2026: register as self-employed with HMRC for 2025/26.
6. By 31 January 2027: file the 2025/26 return online and pay the 2025/26 bill, plus the first 2026/27 payment on account if it applies.
7. 31 July 2027: pay the second 2026/27 payment on account. Check now whether 2025/26 turnover puts you into MTD from 6 April 2027.

Illustrative example: an American furniture maker moves to Bristol and starts a sole trade on 1 September 2025. Turnover for the rest of 2025/26 is £26,000, so she files the short SA103S pages, registers by 5 October 2026 and files online by 31 January 2027. Her 2025/26 turnover is under £30,000, so MTD does not start for her in April 2027, but 2026/27 turnover of £48,000 is over £20,000 and brings her in from 6 April 2028. If her 2026/27 profit is £36,000, her Class 4 National Insurance at 2026/27 rates is 6% of £23,430, or £1,405.80, and Class 2 is treated as paid. On the US side, she reports the business on Schedule C for calendar 2025 and 2026, attaches HMRC's certificate of coverage to each Form 1040 so no SE tax is due, and credits her UK income tax on Form 1116. Her business account pushes her UK balances over $10,000, so she files an FBAR.

What people get wrong

• Treating the FEIE as a full answer. It never removes SE tax. Without a certificate of coverage, an American who excludes all their UK profits can still owe US SE tax on them.
• Trying to credit National Insurance. Class 4 is not a creditable tax for US purposes; the certificate is the only route to avoid paying both.
• Forgetting payments on account. The first 31 January bill can be about one and a half times the year's tax.
• Leaving the business account off the FBAR. A sole trader's account is a personal account in law, and it counts.
• Picking an awkward year end. A 31 December accounting date means apportioning profits for the UK every year under the tax year basis.

Setting up both sides together

A UK sole trade only works smoothly for an American when the UK return, the National Insurance position, the certificate of coverage and the US return are planned at the start. Our self employed Self Assessment UK American work for contractors and sole traders brings those pieces together, alongside our UK Self Assessment service and wider support for Americans in the UK. If you are weighing up advisers, our page on accountants for US and UK tax explains what to look for.

US/UK Cross Border Tax is US CPAs and UK tax advisers working as one team, with offices in London, Manchester, New York and San Francisco. If you have started, or are about to start, trading in the UK, contact us and we will set out what each country needs from you and when.