If you are self-employed — whether as a sole trader, freelancer, contractor, or gig worker — you are responsible for reporting your income and paying your own tax through Self Assessment. Unlike employees, your tax is not automatically deducted from your earnings.
This guide covers everything you need to know for the 2025/26 tax year (6 April 2025 to 5 April 2026).
Who Needs to File a Self Assessment Tax Return?
You must file a Self Assessment return if, in the tax year, you:
- Were self-employed and earned more than £1,000 (the trading allowance)
- Were a partner in a business partnership
- Had rental income from property
- Had untaxed income over £2,500 (e.g., savings interest, investment income)
- Had total taxable income over £100,000
- Received Child Benefit and you or your partner earned over £60,000 (High Income Child Benefit Charge)
- Were a company director
- Had income from abroad
- Received a P800 from HMRC saying you owe tax
Key Dates and Deadlines for 2025/26
| Date | Action Required |
|---|---|
| 6 April 2025 | 2025/26 tax year begins |
| 5 October 2025 | Deadline to register for Self Assessment if new to it |
| 31 January 2026 | Online Self Assessment filing deadline for 2024/25 |
| 31 January 2026 | Tax payment deadline for 2024/25 + 1st payment on account for 2025/26 |
| 31 July 2026 | 2nd payment on account for 2025/26 |
| 31 January 2027 | Filing deadline for 2025/26 return |
Miss the 31 January deadline and HMRC will issue an automatic £100 penalty — even if you owe no tax. Penalties increase after 3 months, 6 months, and 12 months.
How to Register for Self Assessment
If you are self-employed for the first time, you must register with HMRC by 5 October following the end of the tax year in which you became self-employed. So if you started trading in 2025/26, register by 5 October 2025.
To register:
- Go to gov.uk and search “register for Self Assessment”
- Create or sign in to your Government Gateway account
- Complete the online registration — you will need your National Insurance number and personal details
- HMRC will send your UTR (Unique Taxpayer Reference) by post within 10 working days
What to Include in Your Return
Your Self Assessment return asks for:
- Total income from self-employment (turnover) — everything you earned, before any deductions
- Allowable business expenses — costs that were wholly and exclusively for your business
- Any other income — employment (P60), rental income, dividends, bank interest
- Tax already paid — e.g., via PAYE if you also have an employer
- Pension contributions — can reduce your tax bill
- Gift Aid donations — can extend your basic rate band
Allowable Expenses for the Self-Employed
You can deduct expenses that are wholly and exclusively for business use. Common allowable expenses include:
- Office costs (stationery, postage, printer ink, software)
- Travel costs (mileage at 45p/mile for the first 10,000 miles, parking, public transport for business trips)
- Clothing (only protective or specialist work clothing — not everyday clothes)
- Staff costs (wages, employer NI, pension contributions for employees)
- Marketing and advertising
- Professional fees (accountant, solicitor, business insurance)
- Phone and broadband (the business proportion)
- Bank charges on business accounts
- Training directly relevant to your current work
- Tools and equipment (may qualify for Annual Investment Allowance — up to £1m per year)
Using Your Home as an Office
If you work from home, you can claim a proportion of:
- Heating and electricity
- Broadband (the business proportion)
- Council tax (in proportion to rooms used for work)
- Mortgage interest or rent (the business proportion)
Alternatively, HMRC allows a simplified flat rate:
- £10/month for 25-50 hours worked at home per month
- £18/month for 51-100 hours
- £26/month for 101+ hours
Understanding Payments on Account
If your Self Assessment bill is over £1,000, HMRC requires you to make advance payments on account towards next year’s bill. Each payment is 50% of the previous year’s tax bill, due on:
- 31 January — alongside your return filing
- 31 July — mid-year top-up
This is the biggest shock for newly self-employed people: in your first year of filing, you can owe up to 150% of your tax bill at 31 January — 100% for the year just ended, plus 50% on account for next year. Planning for this is essential.
National Insurance for the Self-Employed
As a sole trader, you pay:
- Class 4 NI: 6% on profits between £12,570 and £50,270 (2025/26 rates); 2% on profits above £50,270
- Class 2 NI: If your profits are above £12,570, Class 2 is now collected via Self Assessment rather than separately
How to Submit Your Return
You can file online at gov.uk using your Government Gateway credentials, or use HMRC’s own free software. Most accountants file on your behalf using professional software — which is more efficient and reduces the risk of errors or missed claims.
Making Tax Digital: What Changes from April 2026?
If your total self-employment and rental income exceeds £50,000, Self Assessment is changing fundamentally from April 2026. Instead of one annual return, you will need to:
- Keep digital records throughout the year
- Submit quarterly updates to HMRC
- Submit an annual End of Period Statement and Final Declaration
The paper-at-year-end approach will no longer be compliant. Getting set up with an accountant and the right software now puts you well ahead of the April 2026 deadline.
Feeling overwhelmed by Self Assessment? We handle everything — from initial registration through to filing and tax planning. Our sole trader packages start from £39/month. Get your quote or get in touch today.
