Filing your first self-employed tax return might seem like climbing Mount Everest without a map.
However, breaking down this seemingly complex process into manageable steps makes it far less daunting than you might think.
Fortunately, learning how to do your self-employed tax return doesn’t require an accounting degree and with the right guidance you can handle this essential task confidently and accurately.
Early preparation and regular monitoring of your tax obligations are key to maintaining compliance and avoiding unnecessary stress or penalties.
Being self employed also needs you to consider the introduction of making tax digital by HMRC, which will affect many self employed individuals and the way their income is declared to them.
Whether you’re a freelancer, contractor, or small business owner, our self employed tax return guide will walk you through each step of completing your self assessment.
Income thresholds for self-employed individuals
The rules for self-employed individuals are straightforward.
You must complete a self assessment tax return if you were self-employed as a ‘sole trader‘ and earned more than £1,000 (before expenses) in the last tax year.
Self employed individuals also receive a personal allowance that let’s you earn up to a certain amount tax free. For the 2025/26 tax year, the standard personal allowance (PA) is £12,570.
While you don’t pay income tax on earnings below this threshold, you must still file a return if your self-employment income is above £1,000.
Remember that if you have income from employment that uses your personal allowance, you’ll need to pay tax on any additional self-employment income above that amount.
Essential Self Employed Tax Return Preparation Steps
Once you’ve determined that you need to file a self assessment, setting up your systems before diving into the actual filing process can save you significant time and frustration.
Setting up your HMRC online account
The first critical step is creating your HMRC online account by using the government gateway service.
This digital portal gives you complete visibility of what you owe, what you’ve paid, and what’s been filed. To set up your account:
- Visit the GOV.UK website and select “Create sign in details”
- Enter your email address to receive a confirmation code
- Create a password and set up a recovery word
- You’ll receive your 12-digit Government Gateway user ID, which you should keep secure
Notably, you may need two separate accounts—one for your personal tax (self assessment) and another for business taxes if you operate as a limited company.
After setting up your account, you can add specific tax services, including self assessment, based on your needs.
Through your online account HMRC offers a free to use tax return completion and submission option.
You have the choice of using HMRC’s service or a third party tax return software.
Important self employed tax return documents
Before starting your tax return, collect all essential paperwork. Key documents include:
- Your 10-digit unique taxpayer reference (UTR)
- Your national insurance number
- Records of all sales and income
- Details of business expenses with supporting evidence
- P60 from employment or pension income under PAYE (if applicable)
- Bank statements and accounting records
- Information about personal income, including bank account interest and dividends
- Documents showing pension or charitable contributions
Essentially, anything related to money coming in or going out of your business needs to be documented and organised.
Having these documents ready prevents delays and reduces errors when completing your return.
The tax related reference numbers and figures should mostly be available online through your personal and self assessment tax account.
Understanding tax-deductible expenses
One advantage of self-employment is the ability to deduct legitimate business expenses from your taxable income.
These deductions can significantly reduce your tax bill.
Allowable self employed expenses include:
- Office costs (stationery, phone bills)
- Travel expenses (fuel, parking, train fares)
- Clothing expenses (uniforms)
- Staff costs (salaries, subcontractor costs)
- Stock and materials
- Financial costs (insurance, bank charges, legal)
- Software and IT support
- Business premises costs (heating, lighting, business rates)
- Marketing and advertising expenses
- Training courses related to your business
- Use of home to cover utility costs
Self employed tax return bookkeeping
Record-keeping for self employment is not merely a legal requirement; it’s a valuable business practise.
Creating a simple book-keeping system as early as you can be done with cheap or free resources and scaled to suit in the future.
HMRC requires you to keep records for at least six years after the submission deadline. An effective system should:
- Track all sales and income
- Document all business expenses
- Maintain clear separation between business and personal finances
- Include regular updates (ideally weekly or monthly)
- Keep backups of digital records
Digital systems in theory make it easier to organise, retrieve, and analyse your financial information.
Consider using digital record-keeping through accounting software or spreadsheets, particularly as making tax digital requirements will apply to most self-employed individuals at some point after April 2026.
Using bank statements are an effective tool and usually free to download in a spreadsheet or other useable format.
Remember, thorough preparation now means fewer headaches later.
Good record-keeping not only satisfies HMRC requirements but also provides valuable insights into your business finances for planning and budgeting purposes.
Registering as self employed for self assessment
Registering with HMRC is a crucial step in your self-employment journey and one that HMRC expects you take automatically.
Without proper registration, you cannot submit your tax return or pay what you owe.
Important deadlines for registration
The golden rule for Self Assessment registration is the 5 October deadline. You must register with HMRC by 5 October following the end of the tax year for which you need to file.
For instance, if you need to file a return for the tax year ending 5 April 2025, you must register by 5 October 2025.
Failing to meet this deadline can result in penalties for “failure to notify”.
Nevertheless, there’s some flexibility – if you miss the registration deadline but manage to pay your tax liability in full by the standard 31 January payment deadline, the penalty should be nil.
Despite this safety net, it’s advisable to complete your return by 31 January as well, enabling you to calculate the amount due and ensure timely payment.
Early registration provides multiple benefits:
- Finding out what you owe sooner
- Creating a budget for your tax bill
- Setting up weekly or monthly payments if preferred
- Having sufficient time to establish a payment plan if needed
The self employed tax return registration process explained
The registration method varies depending on your circumstances:
For most self-employed individuals and landlords: You can complete this online through the HMRC online tax registration service or print the form CWF1 and post it to the address on the form.
For partners in partnerships: Register using form SA401, available online or as a printable document.
After submitting your registration, HMRC will send you a letter containing your unique taxpayer reference (UTR) number. This typically arrives within 10 working days (21 days if you live abroad).
If you already possess a UTR from previous tax returns, you should still notify HMRC by the 5 October deadline if you need to file a return for the previous year.
Correspondingly, if you’ve registered before but didn’t send a return last year, you must register again to reactivate your account.
The registration process generally follows these steps:
- Visit the GOV.UK ‘Register for self assessment’ page
- Complete the questions to determine if you need to register
- Follow the guidance on registration based on your situation
- Register through your business tax account (you’ll need to sign in or create a government gateway account)
- Receive your UTR by post
- Wait for HMRC to notify you about filing your self assessment
Remember that the sooner you register, the more time you’ll have to prepare your tax return, reducing last-minute stress and potential errors.
Completing Your Tax Return: Section-by-Section Walkthrough
Now that you’re registered with HMRC, it’s time to tackle the tax return form itself.
Filing your Self Assessment requires working through several distinct sections, each requiring specific information.
It’s common for only a few sections to be relevant so just fill in the parts that are applicable to your tax position.
Personal information section:
Initially, you’ll complete the SA100 form, which serves as the main tax return. This section requires:
- Your 10-digit unique taxpayer reference (UTR)
- National Insurance number
- Full personal details
Remember to update HMRC if you’ve changed details like your name or address during the tax year.
Self-employment section:
For self-employment income, you’ll need to complete either:
- SA103S (short form) – for straightforward tax affairs
- SA103F (full form) – required if your annual turnover exceeds the VAT threshold
This section demands details of all income earned through self-employment.
You’ll need to report profits based on your accounting period, using either the accruals basis or cash basis.
Self employed expenses and allowances
Importantly, you can reduce your tax bill by claiming legitimate business expenses.
For turnovers below £90,000, you can enter your total expenses without itemisation.
With higher turnovers, you must break down expenses into categories including:
- Office costs and supplies
- Travel expenses
- Staff costs
- Premises expenses
- Advertising and marketing
You’ll also claim capital allowances on your tax return for substantial equipment purchases.
Calculating your tax liability
The system calculates your tax based on the information provided. As an example for tax year 2025/26, you’ll pay:
- 0% on income within your Personal Allowance (£12,570)
- 20% on basic rate income (£12,571-£50,270)
- 40% on higher rate income (£50,271-£125,140)
Additionally, you’ll pay National Insurance contributions:
- Class 2: £3.45 per week (voluntary if profits below £6,725)
- Class 4: 6% on profits between £12,570-£50,269 and 2% above that
Reviewing your tax return before submission
Prior to submitting, thoroughly check your return for errors. Common mistakes include:
- Incorrect UTR numbers
- Missing supplementary pages
- Calculation errors in expenses
- Omitted income sources
Third party software and HMRC’s online system can identify basic errors, but ultimately, accuracy remains your responsibility.
HMRC’s system allows you to save your progress and return later, giving you time to verify all information.
Paying your self assessment tax bill: Options and Deadlines
After completing your tax return, the final crucial step is paying your tax bill correctly and on time.
Understanding when and how to pay can prevent penalties and help manage your finances (especially cash flow) effectively.
Understanding your payment deadline
The standard self assessment payment deadline is 31 January following the tax year. For example, tax due for the 2024/25 tax year must be paid by 31 January 2026.
If your previous tax bill exceeded £1,000, HMRC typically requires you to make “payments on account” – two equal instalments towards your next tax bill. These payments are due:
- 31 January (during the tax year)
- 31 July (following the tax year)
Each payment equals half of your previous year’s tax liability.
On 31 January, you might need to pay both your balancing payment for the previous year and your first payment on account for the current year.
HMRC offers numerous payment options to suit your preferences:
- Online or telephone banking (Faster Payments)
- Debit or corporate credit card online
- CHAPS transfer
- Direct Debit (single or recurring)
- At your bank/building society (with a paying-in slip)
- Cheque through post
The fastest method is online payment. Allow sufficient time for your payment to reach HMRC, as processing times vary by method. Personal credit cards are no longer accepted.
Setting up a payment plan if needed
Struggling to pay? HMRC offers two main options:
- Budget Payment Plan: This allows you to make regular weekly or monthly contributions towards future tax bills. You choose how much to pay, which helps spread the cost throughout the year.
- Time to Pay Arrangement: If you’ve missed a deadline or cannot pay your tax bill, you may qualify for a Time to Pay arrangement.
This is available if you owe £30,000 or less, have filed your latest return, and are within 60 days of the payment deadline.
HMRC charges interest on late payments, starting from the day after the payment was due so contacting them promptly if you’re struggling is always advisable.
Other situations requiring Self Assessment
Beyond self-employment, numerous other circumstances require filing a Self Assessment tax return.
You’ll typically need to complete one if:
- You are a partner in a business partnership
- You’ve earned £2,500 or more in untaxed income, such as from tips or commission
- You have savings income of £10,000 or more (excluding ISA savings)
- You have dividend income of £10,000 or more (excluding ISA dividends)
- You have rental property income exceeding certain limits
- Your total taxable income was £150,000 or more before tax
- You need to pay the high income child benefit charge
- You have capital gains tax to pay
- Foreign income, trust income, or being a minister of religion also creates a filing requirement.
Do I need to complete a self assessment tax return?
Understanding whether you need to complete a self assessment tax return is the first critical step in fulfilling your tax obligations.
Some individuals mistakenly assume they don’t need to file a return, which can lead to penalties from HM Revenue and Customs.
Even if HMRC hasn’t contacted you, it’s your responsibility to determine if you need to file.
If you discover you should have been filing returns, register for self assessment as soon as possible to minimise potential penalties.
Using HMRC’s checking tool
If you’re unsure about your filing obligations, HMRC provides a helpful online checking tool.
This official tool asks a series of questions about your financial situation and provides guidance based on your answers.
To use the tool:
- Visit the GOV.UK website
- Answer questions about your income sources
- Receive a determination about your SA filing requirements
Importantly, the tool won’t send your details to HMRC, making it a safe way to check your obligations.
It’s advisable to keep a record of your answers and the result the tool gives you for future reference.
If you can ask HMRC to cancel the filing requirement, and if they agree, any late filing penalties will be cancelled automatically.
Understanding Making Tax Digital for Income Tax Self Assessment
Self-employed individuals and landlords should familiarise themselves with upcoming changes to how they report income to HMRC.
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is transforming the traditional annual self-assessment process into a digital, quarterly reporting system.
Who will be affected by MTD and when?
From April 2026, those earning over £50,000 from self-employment or property rental must comply with MTD for ITSA requirements.
This threshold will subsequently drop to £30,000, then £20,000, progressively bringing most self-employed taxpayers and non incorporated landlords into the digital system.
What does compliance involve?
Under MTD for ITSA, you’ll need to:
- Maintain accounting records using compatible digital software
- Submit income and expense summaries to HMRC every quarter
- Complete a final declaration at year-end
This quarterly submission process replaces the conventional annual tax return.
MTD Key Features
The system centres on regular digital updates throughout the tax year, culminating in a final declaration that confirms your figures are complete and accurate.
Key First Tax Return Takeaways
Filing your first self-employed tax return might seem daunting, though breaking down the process makes it manageable.
Proper preparation, timely registration, and accurate record-keeping form the foundation of a successful tax return submission.
First-time registration provides HMRC with accurate information about your earnings, allowing them to calculate the correct amount of tax owed.
Additionally, it ensures you receive essential documents like your UTR number, which streamlines the filing process.
Understanding your obligations helps prevent costly mistakes. Staying aware of key deadlines becomes essential – particularly the 5 October registration deadline and 31 January payment deadline.
Additionally, keeping detailed records of income and expenses throughout the year simplifies the filing process significantly.
HMRC offers various payment options and support systems for self-employed individuals. Payment plans allow flexibility when needed, while digital tools streamline the entire process.
Most importantly, approach your tax return systematically, following each step carefully.
This methodical approach, combined with proper documentation and timely submissions, ensures you meet your tax obligations confidently and accurately.
Frequently Asked Questions About Self-Employed Tax Returns
Q: When do I need to register for self assessment as a self-employed person?
A: You must register by 5 October following the end of the tax year you need to file for. For example, if filing for the tax year ending 5 April 2025, register by 5 October 2025. Missing this deadline can result in penalties, though if you pay your full liability by 31 January, the penalty may be waived.
Q: What income level requires me to file a self-employed tax return?
A: You must file a self assessment if you earned more than £1,000 from self-employment (before expenses) in the tax year. Even if your earnings fall below the £12,570 personal allowance, you still need to file if you exceed the £1,000 threshold.
Q: What expenses can I claim as a self-employed individual?
A: Allowable expenses include office costs, travel expenses, uniforms, staff salaries, stock and materials, insurance, bank charges, software, business premises costs, marketing, relevant training courses, and home use costs. These must be genuine business expenses with supporting documentation.
Q: When is the deadline to pay my self assessment tax bill?
A: The payment deadline is 31 January following the tax year. If your previous tax bill exceeded £1,000, you’ll also need to make two payments on account – one on 31 January (during the tax year) and another on 31 July (after the tax year ends).
Q: Do I need to use accounting software for my tax return?
A: Currently, you can choose between HMRC’s free online service or third-party software. However, from April 2026, those earning over £50,000 from self-employment or property will need compatible digital software for Making Tax Digital requirements, which involves quarterly digital reporting.
Q: What documents do I need before starting my tax return?
A: Essential documents include your unique taxpayer reference (UTR), National Insurance number, records of all income and sales, business expense receipts, bank statements, P60 (if applicable), and information about any other income sources like dividends or savings interest.
Q: Can I set up a payment plan if I can’t afford my tax bill?
A: Yes. HMRC offers Budget Payment Plans for spreading costs throughout the year, and Time to Pay arrangements if you owe £30,000 or less, have filed your return, and are within 60 days of the deadline. Interest applies to late payments, so contact HMRC promptly if struggling.
Q: How long must I keep records for self-employment?
A: HMRC requires you to keep all business records for at least six years after the submission deadline. This includes records of sales, income, expenses, bank statements, and supporting documentation. Digital record-keeping is recommended for easier organization.
