Whether you've just taken the plunge into self-employment or you're navigating your first full tax year as a sole trader, managing your tax responsibilities can seem overwhelming. But it doesn’t have to be. This guide walks you through each step of the UK Self Assessment process for self-employed individuals, from registering with HMRC to claiming the expenses you're entitled to. Our aim is to make tax less taxing, so you can focus on growing your business.
1. Registering as Self-Employed with HMRC
Before you do anything else, make sure you’ve registered as self-employed with HM Revenue & Customs (HMRC). This is a legal requirement if you're earning income from self-employment. If you're just starting out, you'll typically complete form CWF1. For other income types like rental income, you'll need form SA1 instead.
When registering, HMRC will ask for your basic details; name, address, National Insurance number, date of birth, as well as information about your business, including your start date and what kind of work you do. Once registered, HMRC will issue your Unique Taxpayer Reference (UTR).
This 10-digit number is essential for all your tax dealings and will be required when submitting your return or making payments.
2. Understanding Your Self Assessment Tax Return
The UK tax year runs from 6 April to 5 April, and each year you’ll need to declare all of your taxable income and gains. This includes money you’ve earned through self-employment, as well as income that’s already been taxed, like wages from a job or interest from your savings.
If your business uses a different year-end than the tax year, say, 31 December, there are special rules. To keep things simple, many new businesses choose to align their accounting year with the tax year.
3. Filing Deadlines You Can’t Miss
After the tax year ends, you’ll have a couple of options for submitting your Self Assessment tax return:
- Paper returns must be submitted by 31 October.
- Online returns (the more popular route) are due by 31 January.
Miss these deadlines and you’ll face a £100 penalty, even if you don’t owe any tax. Additional fines will apply the longer your return remains outstanding.
4. Paying Your Tax Bill
Alongside submitting your return, you also need to pay any tax owed by 31 January. You can do this by Direct Debit, bank transfer, or other online methods. If your total tax bill is over £1,000 and not much was deducted at source, you may also have to make ‘payments on account’ - instalments towards next year’s bill due on 31 January and 31 July.
5. Keeping Track of Records
Good record-keeping has always been essential for self-employed individuals, but with the upcoming Making Tax Digital (MTD) rules, it's becoming even more important. If you're earning over £50,000, you’ll need to start keeping digital records and submitting quarterly updates to HMRC from April 2026. Those earning over £30,000 will follow from April 2027.
Many of our clients start with simple spreadsheets or a basic cashbook to track income and expenses, and that’s absolutely fine in the early stages. As MTD becomes a requirement, we can guide you through what needs to change and support you in making the switch to digital record-keeping, without overcomplicating things or pushing software you don’t need.
6. Don’t Forget Other Sources of Income
Self Assessment isn’t just for your self-employed income. You’ll also need to report income from other sources. This includes interest, dividends, pensions, rental income, and capital gains.
Make sure you collect supporting documents like bank interest certificates, dividend vouchers, P60s, gift aid receipts, and any proof of state benefits or property income.
7. What Expenses Can You Claim as a Sole Trader?
As a self-employed person, you can deduct allowable business expenses from your income to reduce your tax bill. Here are some common ones:
- Materials and stock
- Office costs (stationery, internet, phone bills)
- Travel and mileage
- Advertising and marketing
- Insurance and bank charges
- Subscriptions and professional fees
- Use of home as an office
- Wages or subcontractor costs
- Business-related training (conditions apply)
For vehicle expenses, you can either claim actual running costs (adjusted for personal use) or use HMRC’s simplified mileage method. The mileage method pays 45p per mile for the first 10,000 miles, then 25p per mile.
8. Capital Allowances Explained
Capital allowances let you claim tax relief on large business purchases like vehicles or machinery. Some assets qualify for 100% relief in the year of purchase, while others (like most cars) qualify at 18% per year. High-emission cars are restricted to just 6% annually.
9. Special Rules for Home Office, Training & Family Wages
If you work from home, you can claim a portion of household costs, such as rent, utilities, and broadband, so long as the space is used exclusively for business.
For training costs, HMRC allows you to claim expenses only if the training helps you maintain skills for your current trade. Learning something completely new doesn’t usually qualify.
You can pay family members for helping in your business, but the payments must be reasonable, properly documented, and comply with minimum wage laws.
10. Why It Pays to Get Professional Help
Filing a Self Assessment tax return for the first time can feel like a steep learning curve. A professional tax adviser can help you avoid errors, maximise your claims, and stay compliant with HMRC rules. They’ll also make sure everything is filed and paid on time, saving you money, time, and stress.
Whether you do it yourself or seek expert help, the key is to stay organised and informed. That way, you can keep your focus where it belongs, on running and growing your business.