How solicitors are taxed depends on how you practise
There is no single tax regime for solicitors. The rules follow the way you work, and many solicitors move between them over a career: an associate on PAYE, a consultant or locum invoicing a firm, a partner or LLP member taxed on a profit share, or a sole practitioner running their own practice. Each route changes how you pay Income Tax and National Insurance, which expenses you can claim, whether you charge VAT and what the Solicitors Regulation Authority (SRA) expects of you.
This guide covers the 2026/27 tax year (6 April 2026 to 5 April 2027) for solicitors in England and Wales. Scotland sets its own Income Tax bands, so Scottish taxpayers will see different figures from the examples below.
Employed, consultant, partner or company
Employed solicitors
If you work for a firm or in-house, your employer runs PAYE and you usually have no tax return to file unless you have other income. Two points catch employed solicitors out. If you pay your own practising certificate fee and Compensation Fund contribution, HMRC allows tax relief on them, and on subscriptions to approved Law Society sections. And the flat-rate working from home relief has gone: employees cannot claim it for 2026/27.
Consultant, locum and freelance solicitors
Consultants paid a share of fees by a consultancy firm, and locums engaged directly, are normally self-employed. You register for Self Assessment, pay Income Tax and Class 4 National Insurance on your profit, and make payments on account. Cash basis is now the default for sole traders, so you are taxed on fees received less expenses paid, unless you opt out.
The SRA also recognises the freelance solicitor: self-employed, practising alone in your own name, with no employees, engaged and paid directly by clients. You can offer non-reserved legal services this way without your practice being authorised. Reserved legal activities are possible too, but only if you meet the conditions in regulation 10.2(b) of the SRA Authorisation of Individuals Regulations, which include at least three years of practice since admission and adequate and appropriate indemnity insurance.
Making Tax Digital for Income Tax matters most on this route. If the self-employed turnover on your 2024/25 return was over £50,000, you have had to keep digital records and send quarterly updates since 6 April 2026. The threshold falls to £30,000 from April 2027 (based on your 2025/26 return) and £20,000 from April 2028. It is measured on turnover before expenses.
Sole practitioners
If you provide reserved legal activities and do not meet the freelance conditions, for example because you employ staff or trade under a firm name, your practice must be authorised by the SRA as a recognised sole practice. The SRA says a decision typically takes about three months, so apply well before you start. For tax you are still a sole trader: the practice profit is your income whether or not you draw it, and it is reported on your own return.
Partners and LLP members
Partners and LLP members are taxed as self-employed on their profit share through their own Self Assessment return, and the firm files a partnership return. Three rules are specific to this route.
- Salaried member rules. An LLP member is taxed as an employee if all three conditions are met: at least 80% of their reward is expected to be fixed "disguised salary", they have no significant influence over the LLP's affairs, and their capital contribution is less than 25% of that disguised salary. The rules apply to LLPs, not general partnerships.
- Basis period reform. Profits are now taxed for the tax year itself rather than the firm's accounting year. If your firm's year does not end between 31 March and 5 April, you will have had transition profit in 2023/24, spread by default over five years up to 2027/28, so 2026/27 still includes a slice.
- Making Tax Digital. Your share of partnership profit does not count towards the MTD qualifying income threshold. LLPs also cannot use the cash basis.
Working through a limited company
A company changes the regulation as well as the tax. The SRA's position is that if you provide your services through a limited company, the company is providing them, and if they include reserved legal activities the company must be an SRA-authorised firm. Freelance solicitor status is not available through a service company. If your company contracts with a medium or large business or a public body, the client decides whether the off-payroll working rules (IR35) apply to each engagement; with a small private sector client, your company decides. Check the regulatory position before you incorporate, then run the numbers with an accountant.
Worked example: £70,000 employed or self-employed in 2026/27
An employed solicitor on a £70,000 salary compared with a consultant solicitor making £70,000 profit after expenses. Both live in England and have no other income.
| 2026/27 | Employed, £70,000 salary | Self-employed, £70,000 profit |
|---|---|---|
| Personal allowance (tax free) | £12,570 | £12,570 |
| Income Tax at 20% on £37,700 | £7,540.00 | £7,540.00 |
| Income Tax at 40% on £19,730 | £7,892.00 | £7,892.00 |
| National Insurance on £37,700 | £3,016.00 (8%) | £2,262.00 (6%) |
| National Insurance on £19,730 | £394.60 (2%) | £394.60 (2%) |
| Total tax and National Insurance | £18,842.60 | £18,088.60 |
| Left after tax | £51,157.40 | £51,911.40 |
The £19,730 is the slice above £50,270 (£70,000 minus £50,270). The self-employed column is £754 better off, but it is not like for like: the consultant funds their own indemnity cover, practising costs and pension, with no holiday or sick pay, and their £70,000 is already after expenses. They also pay later and in lumps. If 2026/27 is their first year of self-employment, 31 January 2028 brings the £18,088.60 bill plus a first payment on account for 2027/28 of £9,044.30, a total of £27,132.90, with another £9,044.30 due on 31 July 2028. Try your own figures in our self-employed tax calculator.
Allowable expenses for self-employed solicitors
An expense is deductible if it is incurred wholly and exclusively for your practice. These are the ones that come up most often.
| Expense | Allowable? | Notes |
|---|---|---|
| Practising certificate fee and Compensation Fund contribution | Yes | Employees can also claim relief if they pay it themselves |
| Professional indemnity insurance | Yes | Freelance solicitors must hold adequate and appropriate cover |
| Law Society section and local law society subscriptions | Yes | Many appear on HMRC's approved list of professional bodies |
| CPD courses and conferences | Yes | Training for a new, unrelated line of business is not allowable |
| Legal research subscriptions, books and software | Yes | Includes practice management and accounting software |
| Travel to clients, courts and other firms | Yes | Actual costs, or 55p a mile for the first 10,000 business miles in 2026/27 and 25p after. Home to your usual workplace is not allowable |
| Phone, broadband and home office costs | Partly | The business proportion only |
| Suits and other everyday clothing | No | Not allowable even if worn only for work |
| Fines and penalties | No | Never deductible |
VAT for solicitors
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or if you expect to go over £90,000 in the next 30 days alone. Most legal services to UK clients are charged at the standard rate of 20%.
Disbursements need care. A payment can only be left out of your VAT calculation if every condition in VAT Notice 700 is met, including that you paid it as your client's agent for something the client received and used. HMRC gives two solicitor examples that fail: a bank's fee for an electronic transfer to or from your client account, and a Land Registry search fee where you use the result to advise the client. Both are part of your own fee and carry VAT, as does your own travel recharged to a client.
The Flat Rate Scheme rate for lawyers and legal services is 14.5%, but if your spending on goods is under 2% of turnover or under £1,000 a year you are a limited cost business and pay 16.5%. That is 19.8% of your net fees, so for most solicitors with VAT on costs to reclaim, standard VAT accounting works out cheaper. Services to business clients outside the UK are generally supplied where the customer belongs and so fall outside UK VAT, but services relating to land follow separate rules.
The SRA Accounts Rules and client money
The SRA Accounts Rules apply to SRA-authorised firms, including recognised sole practices, that receive or hold client money. They sit alongside your tax obligations and are strictly enforced.
- Client money must be held in a client account at a bank or building society in England and Wales, kept separate from the firm's own money.
- At least every five weeks, each client account must be reconciled against the cash book and client ledgers, with the record signed off by the COFA or a manager.
- If you held or received client money during an accounting period, you must obtain an accountant's report within six months of the period end, and deliver it to the SRA if it is qualified. You do not need one if all client money came from the Legal Aid Agency, or if your client account balances averaged no more than £10,000 and never exceeded £250,000.
- The report must be signed by an accountant who is a member of a chartered accountancy body and is, or works for, a registered auditor.
Freelance solicitors do not hold client money, apart from money for fees and unpaid disbursements received before a bill in the narrow circumstances the rules allow. If your firm needs an accountant's report, it must come from a reporting accountant who meets rule 12.5.
Key dates for 2026/27
- 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027: MTD for Income Tax quarterly update deadlines, if you are in the scheme and use standard update periods.
- 5 October 2026: register for Self Assessment if you started self-employment in 2025/26.
- 31 January 2027: file your 2025/26 return online, pay the balance and make your first payment on account for 2026/27.
- 31 July 2027: second payment on account for 2026/27.
- 31 January 2028: 2026/27 return and balancing payment due.
- Each VAT period: return and payment due one calendar month and 7 days after the period ends.
How GoForma helps solicitors
GoForma is an online accountancy practice based in London, working with clients across the UK by phone, video, email and WhatsApp. Our accountants are ACCA and AAT qualified, and FreeAgent accounting software, worth £360 a year, is included in every package.
- Consultant and locum solicitors: Start Sole Trader is £44 a month, 50% off for the first three months, with your Self Assessment return and a dedicated accountant. Start Sole Trader + MTD (£68) adds quarterly MTD submissions, and Start Sole Trader + VAT (£68) adds VAT returns.
- Solicitors working through a company: Start Bundle is £88 a month, 50% off for the first three months, covering year-end accounts, the CT600, payroll for one director and an IR35 review on every contract. Operate Bundle (£128) adds VAT returns, your director's Self Assessment and the confirmation statement.
- A one-off return: a single Self Assessment tax return is £198.
Prices exclude VAT, run month to month and can be cancelled anytime. Compare all packages, or book a free consultation to talk through how you practise. GoForma is rated 4.9 on Google from 72 reviews and 4.8 on Trustpilot from 142 reviews.