About this case study
The situation
A freelance designer in Manchester works as a sole trader for several agencies. For the 2024/25 tax year (6 April 2024 to 5 April 2025) they invoiced £66,500 and spent £8,500 on allowable business costs: software, equipment and a share of home running costs. They have no other income. The online return is usually due by 31 January 2026.
What they needed
- A clear profit figure from a year of invoices and receipts.
- The income tax and National Insurance due, with the working shown.
- To know whether payments on account apply for the next year.
- A draft they could copy into HMRC's online service themselves.
How TaxOrch handled it
- 1Read the documentsInvoices and receipts were uploaded, read and grouped into income and expense categories, with unclear items flagged as questions.
- 2Confirm allowable expensesTaxOrch asked about the home-office share and a laptop used partly for personal use, rather than guessing the split.
- 3CalculateThe UK calculator applied the 2024/25 personal allowance, bands and Class 4 rates, citing HMRC for each figure.
- 4Prepare the draftA draft package with the working and the payments-on-account schedule was produced and marked as not filed.
The result
| Line | Amount |
|---|---|
| Turnover | £66,500.00 |
| Allowable expenses | £8,500.00 |
| Trading profit | £58,000.00 |
| Personal allowance | £12,570.00 |
| Taxable income | £45,430.00 |
| Basic rate: £37,700 at 20% | £7,540.00 |
| Higher rate: £7,730 at 40% | £3,092.00 |
| Income tax | £10,632.00 |
| Line | Amount |
|---|---|
| £12,570 to £50,270 (£37,700) at 6% | £2,262.00 |
| Above £50,270 (£7,730) at 2% | £154.60 |
| Class 4 National Insurance | £2,416.60 |
| Total for 2024/25 (income tax plus Class 4) | £13,048.60 |
| Each 2025/26 payment on account (half), due 31 January 2026 and 31 July 2026 | £6,524.30 |
Payments on account apply because the bill is over £1,000 and none of it was collected through PAYE. The designer can ask HMRC to reduce them if they expect lower profit next year.
What TaxOrch did not do
- It did not file the return. The designer submitted it through HMRC's online service.
- It did not make any payment to HMRC.
- It did not decide the personal-use split of the laptop; it asked, and used the designer's answer.
- It did not give professional tax advice; it provided decision support with the working shown.
Try it yourself
Read more in tax help for freelancers and the UK tax guide.
White-label licenceTaxOrch under your firm's brandYour name, logo and web address on the app your clients use, hosted and run by TaxOrch. Priced on the clients and users it will serve.
Try it firstA demo on your own questionsBook a live demo, or ask for a demo account and run your own questions, documents and a client case before you commit to anything.
Frequently asked questions
What was the personal allowance for 2024/25?
- £12,570, reduced for incomes above £100,000. The basic rate of 20% applied to the next £37,700 of taxable income and the higher rate of 40% above that, in England, Wales and Northern Ireland.
Did TaxOrch submit this return to HMRC?
- No. TaxOrch prepared a draft marked as not filed. The freelancer submitted the return through HMRC's online service.
Why are payments on account included?
- HMRC usually asks for two advance payments towards the next year when the Self Assessment bill is over £1,000 and less than 80% of tax was collected at source. Each is half of the previous year's bill.
Sources
Related on TaxOrch
- UK tax guideDeadlines, forms and reliefs.
- Tax calculatorEstimates with the working shown.
- All case studiesMore worked examples.