Guides
Self Assessment Tax Return: A Sole Trader's Guide
Published 18 Jul 2026 · Updated 18 Jul 2026
Self Assessment is how a sole trader tells HMRC what they earned and pays the tax on it. If your gross trading income is more than £1,000 in a tax year, you register for Self Assessment and then report your income and expenses on a tax return each year. The date to remember is 31 January: that is when your online return is due and when the tax is due to be paid. This page covers who has to file, the deadlines, payments on account and the penalties for filing or paying late.
Making Tax Digital for Income Tax changes how some sole traders and landlords keep records and submit this annual return. It is being phased in using combined gross self-employment and property income, so check the MTD guide early if your income may be above the thresholds.
This guide focuses on the return itself. For the wider picture, including why sole traders file nothing with Companies House, start with sole trader accounts.
Who has to file a Self Assessment tax return?
You must register for Self Assessment as a sole trader once you earn more than £1,000 of gross trading income in a tax year (6 April to 5 April). That £1,000 is your takings before expenses, not your profit — below it, you do not need to register for the trade.
The deadline to register is 5 October after the end of the tax year in which you started trading. Register late and you can face a separate penalty for the late notification, and — this is the part people miss — registering late does not move the date the tax is due. Register as soon as you know you need to.
What are the Self Assessment deadlines?
| What | Deadline |
|---|---|
| Register for Self Assessment | 5 October after the end of the tax year you started trading |
| Paper tax return | 31 October (HMRC must receive it, not just have it posted) |
| Online tax return | 31 January — the deadline almost every sole trader uses |
| Pay your tax | 31 January, plus 31 July where payments on account apply |
| Have tax collected through your PAYE tax code | File online by 30 December — available only if you owe less than £3,000 and already pay tax through PAYE |
| Return issued late by HMRC | 3 months from the date on the notice, where that is later |
A note on the tax-code route: if you already pay tax through PAYE (say from a job or a pension) and owe less than £3,000, you can ask HMRC to collect the Self Assessment tax through next year's tax code instead of in one lump — but only if you file online by 30 December, and you cannot make a part payment to get under the £3,000 line.
What are payments on account?
Payments on account are advance instalments towards next year's tax bill. Once your tax bill reaches a certain size, you pay in three moves rather than one:
- a balancing payment for the year just gone, plus your first payment on account, both due 31 January;
- a second payment on account, due 31 July.
You do not have to make payments on account if either of two things is true: the tax you owed last year was less than £1,000, or more than 80% of last year's tax was already collected at source (for example through PAYE). Otherwise, each payment on account is usually half of the tax you owed the previous year.
The trap for a new sole trader is the first January after a good opening year. That 31 January brings the whole year's tax plus half of it again on account — roughly 150% of a year's bill in one payment. Knowing months ahead turns it into a savings target rather than a shock.
If you expect to earn less than last year, you can ask HMRC to reduce your payments on account (online, or on form SA303). Be careful: if you reduce them too far and it turns out you owed more, HMRC charges interest on the shortfall. Reduce on a realistic estimate, not a hopeful one.
How do I file a Self Assessment tax return?
Nearly all sole traders file online through their HMRC account. The return is the SA100, and as a sole trader you also complete the self-employment pages that report your business income and expenses. You can file directly through HMRC or through commercial tax-return software. If you would rather someone else prepared and checked it, speak to an accountant.
How long do I keep my records?
Keep your business income and expense records — the ones that back up the figures on your return — for at least 5 years after the 31 January submission deadline for that tax year. If you ever lose records, do your best to provide accurate figures and tell HMRC, using estimated or provisional numbers where you have to.
What are the penalties for filing or paying late?
Under the current rules, missing the filing deadline brings a £100 penalty straight away, even if you have no tax to pay. The longer a return stays outstanding, the more is added — daily penalties, then further charges based on a percentage of the tax due. Paying late is charged separately, again as a percentage of the unpaid tax, with interest on top of anything outstanding from the due date. (Interest tracks the Bank of England base rate plus 4% — around 7.75% at the start of 2026 — so it moves over time.)
This penalty system is changing. A new, points-based regime is being brought in, and the well-established position to plan around is that the new penalty regime reaches all personal Self Assessment taxpayers from the 2027/28 tax year. Whichever regime applies, the answer to a missed deadline is the same: file as soon as you can, and if paying is the problem, contact HMRC early about a payment plan — that generally pauses penalties while you keep to it, though interest still runs.
Is Self Assessment changing?
For most sole traders, filing a Self Assessment return once a year carries on as it is. What is changing is how higher-income sole traders and landlords do it. From 6 April 2026 onwards, people with qualifying income over the thresholds move to Making Tax Digital for Income Tax — digital records, quarterly summaries, and the annual return submitted through software. It does not replace Self Assessment, and it does not change when you pay. If your gross income from self-employment and property is heading past £50,000, read Making Tax Digital for Income Tax next. Everyone below the thresholds keeps filing the normal way for now.
Frequently asked questions
When is my Self Assessment tax return due? Online returns and payment are due by 31 January after the tax year ends. A paper return is due earlier, by 31 October.
Do I need to file Self Assessment as a sole trader? Yes, once your gross trading income is more than £1,000 in a tax year. Register by 5 October after the end of the tax year you started trading.
What are payments on account? Advance instalments towards next year's tax, due 31 January and 31 July, each usually half the previous year's bill. You are not asked for them if last year's bill was under £1,000 or if more than 80% of your tax was already collected at source.
What happens if I file or pay late? Under the current rules, a £100 penalty applies as soon as you miss the filing deadline, with more added the longer it is outstanding and interest on any tax paid late. Contacting HMRC early about a payment plan generally pauses penalties.
How long do I keep my records? At least 5 years after the 31 January deadline for the tax year the records relate to.
I run a limited company, CIC or charity — do I file Self Assessment? The business does not — a company reports through a Company Tax Return, not Self Assessment (though a director may still need a personal return for other reasons). The two get mixed up constantly: Self Assessment vs company tax return untangles them, and other organisation types points you to the right guidance.
Rather have someone prepare, check and file it for you? Speak to an accountant →