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Apr 17th 2025
Article Provided by PolicyBee
If you’re wondering, “Do I need professional indemnity insurance?” this guide is here to help.
But before we look at why your business needs professional indemnity (PI) insurance, let’s shed some light on what it actually is.
Professional indemnity insurance is there to protect you if a client claims you didn’t do your job properly. It mops up the costs associated with the legal process, pays any compensation owed, and – with any luck – upholds your reputation along the way.
You might think you’re immune to messing up, but we all do it from time to time. Even the most professional professional gets things wrong on occasion. Or someone gets it wrong on their behalf.
Even when you’ve done nothing wrong at all, but somebody says you have – you’ll need legal advice and representation.
You’ll need professional indemnity insurance if your business:
In other words, if your expertise and reputation are central to your business, professional indemnity insurance is essential.
Things don’t always go as planned. Subcontractors might mess up, delays might occur, or errors might happen. Even if the mistake isn’t yours, you can be held accountable. And clients can sue for the entire project’s value, not just your share, which makes the legal costs skyrocket.
For certain professions, such as architects and accountants, professional indemnity insurance isn’t just advisable – it’s compulsory. Even though professional indemnity insurance isn’t a legal requirement, regulatory bodies often require their members to have it. Especially in high-stakes professions where mistakes can have serious consequences.
For example, architects and surveyors are responsible for structural safety, while accountants and IT companies deal with sensitive, personal, and financial data. In these fields, mistakes can lead to significant financial losses, legal disputes, or even risks to public safety, making PI insurance essential to safeguard both professionals and their clients.
Most professional people are exactly that and do a grand job. Ironically, you need the most help when you haven’t actually done anything wrong…spurious accusations happen all the time and are ferociously expensive to fight.
So, how does PI help? Is professional indemnity insurance worth having?
If you’re on the receiving end of a claim, regardless of its validity, it’s going to be emotionally and financially draining to deal with on your own. You’ll be confused about the legal stuff and worried about what’s going to happen to you and your business.
The only certainty is the sleepless nights, where you’re left wondering:
What happens if I don’t have professional indemnity insurance?
Can I afford a long legal battle? Or even a short one?
Will I have time to deal with this and look after my clients?
Who can I go to for advice?
What happens if I lose?
Your time, your money, your business, and your reputation – these are the things your professional indemnity policy protects.
How? Well, your insurer has two essential things that you (probably) don’t: legal expertise and deep pockets. It hands the legal stuff to its solicitors to prepare your defence and fight your corner. It pays their bills and compensates your client if needs be too.
You have to give them the stuff they need to help, of course, but otherwise you can more or less let them get on with it.
No eye-wateringly expensive bills. No legal action. No lost clients. No lost reputation. Just business as usual.
All the will in the world, all the best intentions, and a shedload of knowledge and expertise go a long, long way. But they don’t make you perfect.
Sometimes the smallest of mistakes can lead to bigger things. Better safe than sorry.
Asking a client to sign a contract before you start a job and having terms and conditions written in is always a good idea. They set out the parameters of how you’ll work, what’s expected, and what’s not.
You can make them as feisty and as detailed as you like. Seemingly watertight even.
But if something does go wrong, your client won’t care two or even three hoots what your Ts & Cs say. If they’re left out of pocket and think it’s your fault, they’ll want you to pay. And who can blame them?
You may think the world of your clients and under normal circumstances, they might have a pretty high opinion of you too.
Building your working relationships on trust and transparency, with respect and good faith as the cornerstones, is a good thing. But if you think there’s nothing that can’t be fixed with a chat, a handshake, and a smile, you could be in for a rude awakening.
Respect and good faith alone will be worth nothing when a client’s asking why their project’s gone £50k over budget. Or why their new website isn’t generating the revenue you said it would. Or why they’ve got a big fine for filing a late tax return.
Clients trust you to deliver. Having PI insurance shows you’re professional, responsible, and prepared.
One of the best things about running your own business is being your own boss. If you work on a contract basis it means you’re able to get in, get out, get paid, and move on.
But your liability doesn’t just stop when your contract does. And mistakes can take weeks, months, even years to rear their ugly heads.
Contract length and timing is actually pretty irrelevant. If your mistake has cost your client, no matter how far in the dim and distant past, they’ll come after you regardless.
Maybe you view professional indemnity cover as an expensive luxury. You could do without having to shell out for yet another monthly Direct Debit. (Interest-free, by the way.)
There are many, many more important things you could spend a couple of hundred quid on. That new iPhone, for example. Or a caramel latte every other day (don’t forget the croissant).
Besides which, if something does go wrong, you can call your solicitor for help. They only charge about £150 an hour or something…
Maybe professional indemnity insurance isn’t so expensive after all.
More than just a certificate and a ticked box, professional indemnity insurance is a brilliant mix of counsellor, legal expert, comfy sofa, bodyguard, PR guru, and exceptionally large money box.
So, really, do I need professional indemnity insurance? If you’ve read all the way to the end of this blog, the answer is likely: yes.
Click here to get your personalised quote with PolicyBee and get started today!
Mar 31st 2025
Article By GoSimpleTax
Personal tax allowances are tax-free amounts of income that you’re allowed to earn or receive. Several types of personal tax allowance are available and all of the main ones are available to UK sole traders.
Claiming personal tax allowances can reduce your annual sole trader tax bill significantly, so it’s important to know which ones are available to you, especially as HMRC will not contact you to tell you, you need to find out and claim them for yourself. Here are the main personal tax allowances you might be able to claim, with some basic information on what they could be worth to you.
An obvious place to start, the Personal Allowance is income that you can earn or receive before you have to pay any Income Tax, whether you’re a self-employed sole trader or an employee working for someone else. The standard Personal Allowance is £12,570 a year (2025/26 tax year). The Personal Allowance decreases by £1 for every £2 of income you receive over £100,000 and if your taxable income is £125,140 or more, the Personal Allowance is not available to you.
The Trading Allowance is £1,000 a year tax exemption that you can earn in self-employed income without having to pay any tax. This can be added to your Personal Allowance. Usually, it’s claimed by those who do occasional casual work here and there, not sole traders with a far bigger turnover. If you do claim the trading allowance, you cannot claim allowable expenses for things you buy for your sole trader business. So, it would not make sense to claim the Trading Allowance if your tax expenses were more than £1,000 within a tax year. Ordinary partnership members cannot claim the Trading Allowance.
Many sole traders also earn income from renting out property or land. The Property Allowance is another £1,000-a-year tax exemption available to landlords who earn taxable income from land or property they rent out. If you earn sole trader and property rental income, you can claim the Trading Allowance and the Property Allowance, although you cannot claim tax expenses for either if you do. If you jointly own a property, you and your fellow property owners can each claim the £1,000 Property Allowance against their share of the annual rental income.
Sole traders who own company shares may have to pay tax on dividend payment income they receive. They can claim the Dividend Allowance, which is a tax-free allowance worth £500 for the 2025/26 tax year (the allowance used to be far higher, in 2022/23 it was worth £2,000). Income tax is only payable on dividends above the £500 threshold, providing other taxable income exceeds the Personal Allowance (£12,570 in 2025/26).
If you’re a sole trader who is married or in a civil partnership and your income is less than £12,570 a year (i.e. the standard Personal Allowance), you may also be able to claim Marriage Allowance, which can reduce your spouse’s/partner’s tax liability. Alternatively, they may be able to claim it to reduce yours. The Marriage Allowance enables sole traders to transfer £1,260 of their Personal Allowance to their spouse or civil partner, which can reduce their tax by up to £250 in the tax year (or vice versa). Regardless of whether you co-habit with someone, you must be married or in a civil partnership to claim the Marriage Allowance.
Those who pay the basic rate of Income Tax can claim the Personal Savings Allowance, which grants up to £1,000 of tax-free interest. Higher-rate Income Tax payers get £500 a year tax-free, but additional-rate Income Tax payers don’t qualify for personal savings interest allowance.
You can claim the Blind Person’s Allowance if you or your spouse are registered blind. This could provide an extra £3,130 of tax-free income in 2025/26. If you do not use it all yourself, some of the Blind Person’s Allowance can be transferred to your spouse.
If you’re a sole trader with young children, to help cover your childcare costs, you could get up to £500 every three months (ie up to £2,000 a year) for each child. If your child has a disability, you could claim up to £1,000 every three months (ie up to £4,000 a year).
To get Tax-Free Childcare, you apply online and set up an online childcare account. Then for every £8 you pay into the account, the government will pay an additional £2 that you can use to pay your chosen childcare provider. If you’re eligible for both, it’s possible to get Tax-Free Childcare as well as 15 or 30 hours of free childcare.
The money must be used to pay for approved childcare, which includes childminders, nurseries and nannies, as well as after school clubs and play schemes. The childcare provider must be signed up to the scheme, so check in advance. Visit government website GOV.UK for more information about Tax-Free Childcare.
Simple, straightforward and designed to save you time and money. GoSimpleTax is a fully HMRC recognised online tax software for anyone who needs to file a Self Assessment tax return.
Get started with GoSimpleTax it’s free to try!
Mar 24th 2025
Article by GoSimpleTax
Having just filed your 2023/24 Self Assessment tax return, hopefully ahead of the 31 January online filing deadline, you probably don’t want to have to think about your next tax return for a good while. That’s perfectly understandable.
However, there are a few very good reasons to start looking at your 2024/25 tax return now, before the tax year ends on 5 April – and not just because it would allow you to file after 6 April and get it done and dusted nice and early.
There’s a clear trend for people choosing to file their Self Assessment tax return early. You can in fact start work on filling in your next tax return before the end of the current tax year. Crucially, it can enable you to find out roughly how much tax you’ll owe, which might enable you to pay more into your pension, for example, rather than paying as much tax. Seek advice from an accountant on the most tax-efficient option for you.
Getting your Self assessment tax return filed nice and early will also give you peace of mind from knowing it’s off your plate for another year. Then you avoid the stress of having to rush in January to file before the online-filing deadline. Who needs that? Rushing can also increase the likelihood that you’ll make mistakes, of course.
Knowing how much tax you owe also enables you to budget for paying your tax bill or speak to HMRC to find a solution if you’re going to struggle to pay. One such solution could be paying in installments. Filing early can also help you to get a tax refund quicker. As soon as your tax return has been processed, HMRC will let you know if you’re due a refund and arrange for your overpayment to be paid back sooner.
Some people file early because they need proof of income, often if they need a mortgage or loan, or want to claim certain benefits. Knowing how much tax you owe can also enable you to judge how well your business is performing and plan for the future. If you’re employed, filing your Self Assessment tax return early might enable you to pay any additional tax you owe via PAYE, should you choose.
This year, many sole traders and landlords will have another good reason to file their tax return early, instead of leaving it until December or January. That’s because Making Tax Digital for Income Tax is being introduced from 6 April 2026, for sole traders and landlords with a gross annual trading/rental income of more than £50,000.
Once introduced, they’ll need to maintain digital financial records and use accounting software that can send digital income and expense summaries to HMRC every quarter. From 6 April 2027, sole traders and landlords with a gross trading/rental income of £30,000-£50,000 will need to do the same.
If sole traders or landlords need to start using accounting software or change to new accounting software so they can comply with MTD for Income Tax requirements, it’s best to do so as soon as possible, so that they’re ready. Getting their Self Assessment tax return filed as soon as possible will clear the decks to help enable them to do so.
Simple, straightforward and designed to save you time and money. GoSimpleTax is a fully HMRC recognised online tax software for anyone who needs to file a Self Assessment tax return.
Get started with GoSimpleTax today it’s free to try!
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