Essential tax guide for self-employed security professionals. Practical tips on tax management, expenses, and income protection from Whittaker & Co.

Many of our self-employed clients work in the security industry, so we’ve created this essential guide tailored just for you. Here, you’ll find straightforward, practical advice for managing your taxes, saving on expenses, and protecting your income as a self-employed security professional. Whether you’re in private security, event security, or cyber protection, these tips can help you keep more of your hard-earned income.

1. Establishing Your Self-Employment Status

To operate as a self-employed security professional, you must first register with HMRC by 5th October in the tax year you begin trading. Upon registration, you will receive a Unique Taxpayer Reference (UTR) number, which you will need to file your self-assessment tax return.

2. Business Structure: Choosing Between Sole Trader and Limited Company

Your business structure affects your tax obligations. Sole traders report all business income on their personal tax returns. In contrast, limited companies allow you to withdraw funds as a mix of salary and dividends, which can be more tax-efficient. However, limited companies also incur corporation tax, so it’s worth assessing which structure best suits your needs.

3. Understanding Your Tax Obligations

As a self-employed individual in the security sector, you are responsible for completing an annual self-assessment tax return. Your tax return for the previous year (ending 5th April) is due by 31st January of the following year. For example, the tax return for the year ending 5th April 2024 must be submitted by 31st January 2025. If your tax liability is over a £1000, HMRC will put you on the payment on account scheme. You will then pay tax every January and every July. Please be aware that the first payment will need to cover 18 months of tax.

4. Key Tax Rates to Be Aware Of

The amount of tax you owe is determined by your income, which falls into the following bands:

5. National Insurance Contributions

Your National Insurance contributions depend on your annual profits, calculated by deducting allowable expenses.

• Profits of £6,725 or More
  • Class 2: No payment is needed, but contributions are counted to protect your record.
  • Class 4: Required if profits exceed £12,570. Rates are:
    • 6% on profits between £12,570 and £50,270
    • 2% on profits over £50,270
• Profits Below £6,725
  • No contributions are required, but you can choose to pay voluntary Class 2 at £3.45 per week to maintain your record.

Most pay Class 2 and 4 contributions through Self-Assessment.

6. Claiming Your Expenses

Running a security business involves various costs, but you can claim many expenses to reduce your taxable income. Here are some of the major deductible expenses you should consider:

• Professional Equipment and Uniforms: Costs for protective gear, uniforms, and other essential tools.
• Licences and Certifications: Deductions for your SIA licence and any relevant industry certifications.
• Office and Communication Costs: Deduct expenses such as stationery, mobile phone bills, and other work-related supplies.
• Training Courses: Any courses that enhance your skills or update you with industry standards can be claimed (initial courses are not allowable).
• Marketing and Advertising: This includes website costs, digital advertising, and other promotional expenses.

7. Mileage and Travel: What You Can Reclaim

If you frequently travel for work, particularly to temporary job sites, you can reclaim for travel in your vehicle. You can either claim by the receipt or mileage, which can lead to significant savings. HMRC’s current mileage rates are as follows:

• First 10,000 miles: 45p per mile for cars
• Above 10,000 miles: 25p per mile for cars
• Motorcycles: 24p per mile

For example, if you drove 8,000 miles last year for work, you could claim £3,600 (8,000 x 45p). If you then drove an additional 4,000 miles, you could claim £1,000 (4,000 x 25p). These deductions can significantly reduce your tax liability.

Navigating tax can be complex, but at Whittaker & Co., we’re here to guide you every step of the way. For personalised advice or questions specific to the security industry, don’t hesitate to reach out to us – we’ll help make managing your taxes straightforward, ensuring you keep more money in your pocket.

For more information on self-employment – Self-employment: detailed information – GOV.UK

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