A sole trader in the UK needs to submit a Self Assessment tax return when your income exceeds £1,000 in a tax year pre-tax relief. This process makes sure you pay the right amount of Income Tax and National Insurance on what you earn. Learning about deadlines, required documents, and the registration process can assist you in avoiding penalties and potentially make filing taxes easier. 

Although you are not required to hire an accountant, getting professional advice may help you. Having access to early filing can also alleviate stress and allow for better financial planning. Luckily, this guide has all you need to make your sole trader tax return as painless as possible.

 

When do you need to submit your tax return?

Every year, sole traders in the UK need to file Self Assessment tax returns with the HMRC before certain deadlines. These deadlines fall on 31 October for paper tax returns and 31 January for online submissions, covering the previous tax year ending on 5 April. If it’s your first time registering for Self Assessment, you have to do this by 5 October. 

The penalties for late submissions begin at £100. Your tax bill is due and must (also) be paid by 31 January, with a second payment on account, if necessary, by 31 July. Filing early means you won’t be scrambling at the last minute.

 

How to register for self-assessment as a sole trader

Sole traders in the UK need to register for Self Assessment with HMRC to report their earnings and pay tax. You must register before the deadline of 5 October in the tax year in which you started trading.

 

Step 1: Check if you need to register

If you made more than £1,000 profit from your self-employment before tax relief in a tax year, you have to register. If your income is below this threshold, you can also elect to register to pay voluntary National Insurance contributions to accrue entitlement to state benefits.

 

Step 2: Create a Government Gateway account

To register, go to the HMRC website and set up a Government Gateway account if you don’t have one already. This account enables you to use HMRC services, such as completing your tax return online

 

Step 3: Complete the registration form

Once logged in, complete the CWF1 form to register as a sole trader for Self Assessment. You’ll need to provide:

• Your full name and date of birth
• National Insurance number
• Contact details
• Business name and nature of work
• Start date of self-employment

 

Step 4: Receive your Unique Taxpayer Reference (UTR)

Once registered, HMRC will issue you a Unique Taxpayer Reference (UTR) number within 10 days (21 if you are abroad). You’ll need this number to file your tax return.

 

Step 5: Set up your online tax account

When you have your UTR, log into your Government Gateway account and register for Self Assessment. You’ll then be prepared to file your tax return ahead of the due date of 31 January.

 

What documents do you need to complete a tax return?

Filing a Self Assessment tax return as a sole trader requires gathering the right documents to ensure accuracy and compliance. Here’s what you’ll need:

 

1. Personal information

• Unique Taxpayer Reference (UTR) – This 10-digit number identifies you for Self Assessment.
• National Insurance (NI) number – Required for calculating NI contributions.
• Government Gateway login details – To access HMRC’s online tax return service.

 

2. Income records

• Invoices and sales records – A summary of all earnings from self-employment.
• Bank statements – To verify income and expenses.
• Employment income (if applicable) – If you also have a job, you’ll need your P60 (annual earnings and tax paid) or P45 (if you left employment during the tax year).
• Other income sources – Rental income, dividends, pensions, or investments.

 

3. Business expenses

• Receipts and invoices – For deductible expenses such as travel, office costs, marketing, and utilities.
• Mileage logs – If you use a vehicle for business.
• Business bank statements – To separate personal and business transactions.

 

4. Tax deductions and reliefs

• Pension contributions – If claiming tax relief on pension payments.
• Charitable donations – If claiming Gift Aid.
• Previous tax return – Useful for comparing figures and ensuring consistency.

 

5. VAT and CIS (If applicable)

• VAT returns – If VAT-registered.
• Construction Industry Scheme (CIS) statements – If working in construction and deductions were made from your earnings.

Having these documents ready makes the tax return process smoother, reduces errors, and helps avoid penalties.

 

Do you need an accountant for your tax returns if you are a sole trader?

As a sole trader, you are not legally required to have an accountant file your tax return, however, you could benefit greatly from one. An accountant makes sure it is correct, maximises tax savings where possible by spotting deductible expenses and minimises your risk of penalties if errors have been made or submissions are late. They can also save you time, particularly if your finances are complicated or you have multiple sources of income. 

If you have relatively simple tax affairs, you might want to submit your return yourself through HMRC’s online tool. Nevertheless, professional advice can save time and ensure long-term financial stability and peace of mind for growing businesses.

 

Why you should file your tax return early

There are many benefits to filing your tax return early: less stress, better financial planning, and more. Here are six key reasons why you shouldn’t wait until the 31 January deadline to submit your Self Assessment.

 

Avoid last-minute stress

Waiting until the last minute to file your tax return can lead to a stressful experience, especially if you run into problems like missing documents or not being able to log in to HMRC. Filing early gives you time to figure out complications.

 

Reduce the risk of errors

Meeting the deadline in a rush may lead to mistakes that could attract penalties from HMRC or result in delays in processing your application. Getting it in early gives you the chance to check the numbers and be accurate.

 

Know your tax bill in advance

Filing early lets you see how much you owe on your taxes. This will help you budget and means that you will be financially ready to make that payment by 31 January (or 31 July if you make payments on account).

 

Receive tax refunds sooner

If you’ve overpaid tax, HMRC will refund you sooner if you submit early. This can give you an immediate financial jolt.

 

Avoid HMRC system overloads

Thousands of people attempt to file their tax returns in January, overwhelming HMRC’s online system and causing delays and technical issues. Filing early helps you prevent these problems.

 

More time to seek professional help

If you have an accountant or tax advisor, filing sooner means you’ll have time to work with them to help you without the constraints of last-minute deadlines.

 

Conclusion

If you are a sole trader, filing your tax return is important to ensure compliance with tax regulations and to maintain accurate financial records. Early registration, diligent record-keeping and awareness of deadlines can all prevent you from stressing out or missing a penalty. While it is possible to do it yourself, using a pro can save time and further optimise tax efficiency.

Reed & Co Accountants offers tax services to make sure everything is filed correctly and to ensure that you make the most of any tax deductions you are entitled to claim. To stay ahead of your tax obligations, contact Reed & Co today.