How to do a self-employed tax return

Q: Do I have to submit a tax return if I earned less than the personal allowance?

The tax threshold – or personal allowance – for 2023/24 is £12,570. This is the amount of yearly income you can get before you have to pay tax. If you earned less than this but more than £1,000 in the previous tax year, you’ll still need to fill in and send a Self Assessment return – even if you don’t owe any tax. You’ll also face a penalty if you don’t get your return in on time.

Q: How long do I have to keep records for in case HMRC asks for them?

If you file your tax return on or before the deadline you should keep your records for at least 22 months after the end of the tax year the tax return is for. So supposing you file your 2022/23 tax return online before the 31 January 2024 deadline, you have to keep your records until at least the end of January 2025. If you send your return in late after the deadline you should keep your records for at least 15 months after you sent the tax return.

Filling in a self-employed tax return can feel daunting. But as long as your accounts are in order and you give yourself plenty of time, it’s pretty straightforward – especially if you do it online.

Here’s our step-by-step guide to self-employed tax returns.

Written by

Mubina Pirmohamed

Business and landlord insurance expert

Last Updated

1 JULY 2024

6 min read

How to do a self-employed tax return

If you’re a self-employed ‘sole trader’ and earned more than £1,000 in the past tax year (6 April to 5 April), you’ll need to send HMRC a Self Assessment tax return.

If you’ve not sent a tax return before, you’ll first need to register for Self Assessment. Registering basically sets you up as a self-employed person with HMRC, so they can collect what tax you may owe each year. Just make sure you get it done by 5 October in your business’s second tax year, or you could face a fine.

Although you could do it by post, it’s far easier to register online You’ll be given access to a Government Gateway user ID which you can then use to register and set up your personal tax account.

Once you’ve registered for Self Assessment, you’ll be able file your tax return, either online or by post.

What is Self Assessment?

Self Assessment is the tax process for self-employed people. Whereas employees pay their taxes directly through PAYE, if you’re self-employed, you have to work out your income and expenses, send a return to HMRC each tax year, then pay what you owe by the given deadline. You can also use the Self Assessment return to claim any tax allowances or relief that you’re entitled to.

How do I register for Self Assessment?

To register online:

Set up a Government Gateway ID and password to sign in. HMRC recommend doing this at least 20 days before you need to file your tax return, to make sure there’s enough time for everything to be set up.
You should receive a Unique Taxpayer Reference Number (UTR) within 10 days – you’ll need this to file your return.
You’ll then be sent an activation code by post.
Use the activation code to open your personal tax account.
Once your account is set up, you can file your tax return before the deadline.

Find out more about registering as self-employed with HMRC.

What are the Self Assessment tax deadlines?

For the tax year 2023/24, the deadlines are:

Registering for Self Assessment – 5 October 2024
Sending a paper tax return by post – 31 October 2024
Submitting an online tax return – 31 January 2025
Paying the tax you owe – 31 January 2025

If you’re a sole trader, you may have to pay your tax bill in twice-yearly instalments. The deadlines for these are 31 January and 31 July. These are known as ‘payments on account’. HMRC does this to help you spread the cost of the next year’s upcoming tax. It’s basically an advance payment towards your tax bill which is predicted by HMRC based on your income from the last tax year.

Make sure you meet the deadlines as you could be charged a penalty if you’re late.

Did you know?
You could be charged a £100 penalty for a late tax return, even if you don’t owe any tax.

Top tip

After your first full year of business, your first tax bill due on 31 January may come as a bit of a shock. That’s because you’ll be paying your tax bill for the previous year PLUS the first instalment of the current year’s predicted tax, all on the same day. The payment on account instalment is usually the same amount as half your previous year’s tax bill, so make sure you put enough money aside to cover it.

Online vs paper tax returns?

HMRC recommends completing an online tax return as it’s “quick, easy and secure”. They’re planning on phasing out paper returns eventually, so if you’re new to Self Assessment, it makes sense to go tax digital right from the start.

Advantages of online tax returns:

You get an extra three months before you need to submit your return.
The online system ‘reacts’ to your answers when you enter your details, removing unnecessary sections that aren’t relevant to you, making the whole process a lot quicker.
As you fill in your details, you’ll also get helpful reminders and extra info if you get stuck.
You can save your progress and continue to fill it in later.
You can make amendments to your online return and adjust your payments on account.
You’ll get immediate acknowledgement from HMRC that your return has been received.
Your tax is calculated automatically, so you’ll receive any rebates due much quicker than if you send a paper return.

What information do I need to fill in a Self Assessment tax return?

Before you fill in your tax return, make sure you have key information to hand. This includes:

Your 10-digit Unique Taxpayer Reference (UTR) number.
Your National Insurance number.
Invoices and details of your turnover (income received from self-employment) during the tax year.
Any dividends and interest on shares you may have.
Any other income you may receive; for example, rental income from property, benefits, pension income.
Records of your self-employed expenses; for example, receipts.
Any claims for tax relief; for example, charity donations or pensions.
P60, P11D or other records showing tax you’ve already paid if you’ve also been in employment during the tax year.

Did you know?
If you’re on a Coronavirus self-employed income support grant, you’ll need to declare it as income.

How to complete a Self Assessment tax return
Income

If you’re filing a paper return, you’ll need to fill in and send form SA100 and a supplementary SA103 self-employment form to HMRC.

If you’re doing it online:

Log-in with your Government Gateway ID and password.
Check your personal details and update any information that’s changed.
Fill in the sections that apply to you.
Enter your self-employed income before expenses.
Enter any other sources of income, like rental income or investment gains.
Add any tax-deductible expenses.
Double check everything is correct – you can save your return and come back to it later – you can also make amendments once it’s been filed.

What expenses can I claim?

As long as they are exclusively related to your business, there are a number of ‘allowable expenses’ you might be able to claim back. For example:

Office equipment – printers, computer software, stationery.
Phone, business broadband and mobile bills.
Business insurance.
Rent for your business premises.
Security.
Business utility bills.
Business-related travel, car and van costs.
Stock and raw materials.
Marketing materials.
Solicitor or accountant costs.

If you run your business from home you might be able to include a percentage of your utility bills, as long as they are used for business purposes.

If you’re a sole trader with an annual income of less than £85,000, you can use the government’s simplified expenses tool which uses a flat rate for some allowable business expenses. It can save you the hassle of having to work out every individual expense.

Did you know?
You won’t be able to claim expenses if you already claim the £1,000 tax-free trading allowance.

Frequently asked questions

How do I pay my self-employed tax bill?

When you submit your return, you’ll get a confirmation message and reference number from HMRC. They will calculate how much tax and National Insurance contributions you’ll need to pay.

The fastest ways to pay:

Online or telephone banking.
Bank transfer.
Direct debit.
In person at your bank or building society.
CHAPS.
Debit card or company credit card (you can’t pay with a personal credit card).

What if I’m struggling to pay my tax bill?

If you’re struggling financially and can’t make the deadline, HMRC may offer you a Time to Pay plan. Just be aware you may be charged interest on what you owe, so your bill could be more expensive in the long run.

If your tax bill is less than £30,000 you might also be able to pay in monthly instalments.

If you’re struggling to pay your tax bill on time, call the HMRC Business Payment Support Service on 0300 200 3825 as soon as possible. They’ll look at your situation and may offer a Time to Pay plan or give you the chance to pay in instalments.

What if I miss the deadline?

If you miss the deadlines to register, submit your return or pay your tax bill, you’ll have to pay a penalty. This is £100 if you’re up to three months late, and more if it’s later. You can appeal, but you’ll need a good excuse to convince HMRC.

What if I make a mistake?

If you fill in your return online, you can save your data and go back to it later. This means you’ll have more time to complete it and avoid mistakes. You can also amend your return and easily correct any errors before filing it.

If you realise you’ve made a mistake once you’ve submitted your return, you can still make changes to it up until next year’s deadline.

Do I have to submit a tax return if I earned less than the personal allowance?

The tax threshold – or personal allowance – for 2023/24 is £12,570. This is the amount of yearly income you can get before you have to pay tax.

If you earned less than this but more than £1,000 in the previous tax year, you’ll still need to fill in and send a Self Assessment return – even if you don’t owe any tax. You’ll also face a penalty if you don’t get your return in on time.

How long do I have to keep records for in case HMRC asks for them?

If you file your tax return on or before the deadline you should keep your records for at least 22 months after the end of the tax year the tax return is for. So supposing you file your 2022/23 tax return online before the 31 January 2024 deadline, you have to keep your records until at least the end of January 2025.

If you send your return in late after the deadline you should keep your records for at least 15 months after you sent the tax return.