Virtual Assistants — Freelance Tax and Expenses Guide

The virtual assistant industry has exploded in recent years, and it's easy to see why. Working from home (or anywhere with decent Wi-Fi), choosing your own clients, setting your own hours — it's an appealing proposition. But as a self-employed VA, you're also running a business, which means you need to get your tax affairs in order.

The good news is that VAs have a range of legitimate expenses they can claim, and the admin involved is manageable once you know what you're doing. This guide covers everything you need to know about tax for freelance virtual assistants in the 2025/26 tax year.

Setting Up as a Self-Employed VA

Before you take on your first client, you need to register as self-employed with HMRC. You can do this online, and there's no charge. Once registered, you'll receive a UTR (Unique Taxpayer Reference) number, which you'll need for your annual Self Assessment tax return.

If you're starting your VA business alongside a full-time job, you still need to register. The same applies if you're only working a few hours a week — there's no minimum income threshold for registration (though the trading allowance means you don't need to pay tax on the first £1,000 of self-employed income).

A few other things to sort early on:

• Business bank account. While not legally required for sole traders, keeping your business and personal finances separate makes bookkeeping infinitely easier and looks more professional.
• Professional indemnity insurance. If you're handling sensitive data, managing social media accounts, or doing bookkeeping for clients, professional indemnity insurance is a smart move. It protects you if a client claims your work caused them a financial loss.
• Data protection. If you handle personal data for clients (and as a VA, you almost certainly will), you need to register with the ICO. The fee for most sole traders is £40 per year.

Tax Rates and How Your Bill Is Calculated

Your tax is calculated on your net profit — that's your total income minus your allowable business expenses. For the 2025/26 tax year:

• Personal allowance: £12,570 — you pay no income tax on earnings up to this amount
• Basic rate: 20% on profits between £12,571 and £50,270
• Higher rate: 40% on profits above £50,270

You'll also pay National Insurance:

• Class 2 NI: £3.45 per week (£179.40 per year)
• Class 4 NI: 6% on profits between £12,570 and £50,270

Let's say you earn £28,000 from your VA work and have £4,000 in allowable expenses. Your taxable profit is £24,000. You'd pay no tax on the first £12,570, then 20% on the remaining £11,430 — that's £2,286 in income tax, plus approximately £866 in Class 4 NI and £179 in Class 2 NI. Total tax and NI: roughly £3,331.

If you hadn't claimed those £4,000 in expenses, you'd pay tax on £28,000 instead, and your total bill would be roughly £4,131. That's £800 saved just by keeping proper records. Use our sole trader tax guide to run your own numbers.

Expenses You Can Claim as a VA

Because most VAs work from home and rely heavily on technology, there are some excellent expenses to claim. Here's a comprehensive breakdown:

Home Office Costs

Since your home is your workplace, you can claim a proportion of your household running costs. You have two options:

1. Simplified expenses (flat rate). HMRC allows you to claim a flat rate based on the hours you work from home each month:

   • 25–50 hours/month: £10/month
   • 51–100 hours/month: £18/month
   • 101+ hours/month: £26/month

2. Actual costs. Calculate the proportion of your home used for business and claim that percentage of your rent/mortgage interest, council tax, electricity, gas, water, and broadband. This often gives a higher figure but requires more record keeping.

Our guide to working from home expenses for 2025/26 explains both methods in detail and helps you decide which is better for your situation.

Technology and Software

This is where VAs can typically claim the most:

• Computer and laptop — fully deductible if used solely for business, or a proportion if shared with personal use
• Monitor, keyboard, mouse, webcam — all deductible
• Printer, scanner, and ink cartridges
• Software subscriptions — Microsoft 365, Google Workspace, Canva, Adobe Creative Suite, project management tools (Asana, Trello, Monday.com), scheduling tools (Calendly), CRM systems, and any other software you use for client work
• Communication tools — Zoom, Slack, or similar subscriptions
• Cloud storage — Dropbox, Google Drive, or similar
• Website and hosting — your professional website, domain name, and hosting fees
• Accounting software — the cost of bookkeeping tools like Accounted is fully deductible

Phone and Internet

If you use your personal phone and broadband for business, you can claim a reasonable proportion. If you have a dedicated business phone line or mobile, the full cost is deductible. A common approach is to claim 50% of your phone bill if you use it roughly equally for personal and business purposes — but be prepared to justify your estimate if HMRC ever asks.

Training and Development

Courses that improve your existing skills are deductible. This includes training in new software, social media management courses, bookkeeping qualifications, and VA-specific training programmes. The key distinction is between training that enhances your current profession (deductible) and training for a completely new career (not deductible).

Marketing and Networking

• Website design and maintenance
• Social media advertising
• Business cards and printed materials
• Networking event fees and memberships (such as VA networking groups)
• Professional association memberships

Other Expenses

• Stationery and office supplies
• Postage and courier costs
• Bank charges on your business account
• Accountancy fees
• ICO registration fee
• Professional indemnity insurance

For the full picture, have a look at our complete list of sole trader expenses.

Managing Multiple Clients and Income Streams

Most VAs work with several clients simultaneously, often on retainer arrangements. This creates a few considerations:

Invoicing. Issue proper invoices for all work, even if a client pays you regularly without being prompted. Your invoices should include your name, address, UTR number, the client's details, a description of services, the amount due, and payment terms.

Retainers vs. hourly billing. From a tax perspective, it doesn't matter whether you charge a monthly retainer, hourly rate, or project fee — it's all taxable income. However, retainers give you more predictable income, which makes budgeting for tax much easier.

IR35 considerations. If you work for a single client who controls when, where, and how you work, there's a risk that HMRC could consider you a disguised employee. This is more of a concern for VAs who work exclusively for one client through a limited company, but it's worth being aware of even as a sole trader. Our IR35 guide explains the rules in detail.

International clients. If you work for clients outside the UK, the income is still taxable in the UK. You don't charge VAT on services supplied to businesses outside the UK (if you're VAT registered), but you still declare the income on your tax return.

Record Keeping and Digital Tools

Keeping good records isn't just an HMRC requirement — it's genuinely helpful for running your business. You need to keep:

• Records of all income received
• Receipts and invoices for all business expenses
• Bank and credit card statements
• Mileage logs (if applicable)

These records must be kept for at least five years after the 31 January submission deadline.

With Making Tax Digital for Income Tax rolling out from April 2026 for those earning over £50,000, digital record keeping is becoming essential rather than optional. But even if you're below this threshold, using a digital tool saves enormous amounts of time.

Penny, the AI bookkeeping assistant within Accounted, can connect to your bank account and automatically categorise your income and expenses. This means your books stay up to date without you spending hours on spreadsheets — time you could spend doing actual client work.

VAT — Unlikely but Worth Knowing

The VAT registration threshold is £90,000 in taxable turnover over any rolling 12-month period. Most solo VAs won't hit this, but if you're running a VA agency or have scaled up significantly, it's worth keeping an eye on.

If you do register for VAT, you'd charge 20% on top of your fees to UK-based clients. Since most of your clients are likely businesses, they can reclaim the VAT, so it shouldn't put them off. However, if you work with non-VAT-registered sole traders or individuals, the extra cost could be an issue.

Smart Tax Planning for VAs

A few tips to keep your tax bill manageable:

Save for tax from every payment. Put 25–30% of every client payment into a separate savings account. This way, your January tax bill won't be a shock.

Claim everything you're entitled to. Many VAs under-claim because they're not sure what counts. If you use something for your business, it's probably at least partially deductible.

Pension contributions. Self-employed people don't get employer pension contributions, so it's up to you. Contributing to a personal pension or SIPP reduces your taxable income and builds your future security. Every £100 you contribute costs you only £80 (as a basic rate taxpayer) because of tax relief.

Plan your year end. If you need new equipment or software, purchasing it before 5 April means you can claim it against the current tax year.

Related Reading

• Car Valets and Detailers — Self-Employed Tax Guide

• Tax Guide for Life Coaches and Business Coaches

• Zoo and Farm Experience Businesses — Visitor Attraction Tax Guide

• Work from Home Expenses 2025/26

• IR35 — Complete Guide for Contractors

• How to Register as Self-Employed with HMRC

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