A sole trader’s guide to filing your first self-assessment tax return

You must submit a self-assessment tax return if you are self-employed as a sole trader and earned more than £1,000 in the relevant tax year before deducting any tax reliefs. There are other reasons why you might need to file a tax return which are outlined here.

If you are required to register for self-assessment with HM Revenue & Customs (HMRC), you must do so before 5th October after the end of the relevant tax year in which you became liable. For example, the deadline for the 2023/24 tax year is 5th October 2024. 

Your self-assessment tax return must be filed by 31st January in the following year. This is also the deadline for when you need to pay the tax you owe. For example, the deadline for the 2023/24 tax year is 31st January 2025. 

Do you need to use an accountant to file a tax return?

There’s no legal obligation to use an accountant to file your self-assessment tax return and it’s perfectly possible to do it yourself. However, the DIY approach can be confusing, particularly for those doing it for the first time. You also face a fine if you get it wrong or miss the deadline. 

Using an accountant means you’ll have peace of mind that everything is done correctly and all the information required by the HMRC is submitted. Your accountant can also make sure you claim all the expenses you're entitled to and maximise your tax savings. 

The documents your accountant needs to see

Your accountant will need various information to complete your tax return: 

Self-employment income: If you have any trading income, you will need to provide details and supporting receipts of all income received and expenses paid.You should also supply copies of bank and credit card statements, including those for the month after the year end in case some payments cleared during the current year. Make sure you keep details of any business miles travelled as an element of motor expenses may be claimed.

Employment income: You will need to provide your P60 if you have any employment income. If your employment stopped during the year, you need to provide a P45 instead. If you received any benefits in kind, your accountant will also need to see a P11D.

Dividend income: You will need to provide details of any dividends received during the year. These are usually supplied by the company in the form of a remittance advice.

Rental income: If you are a landlord, you need to provide details of your rental income, property management expenses and mortgage interest. Tax relief is available on some costs such as mortgage interest payments. More information on allowable expenses can be found in our landlords guide.

Private pension contributions: Tax relief is available on private pension contributions so you should provide details of all pension payments made during the year.

Bank interest: Your tax return must include details of any interest you’ve received on bank and building society accounts. You do not need to declare tax-free products such as ISAs.

Other income or gains: This could be from a pension provider, another self-employed role or from selling a rental property or shares etc.

Software to keep your accounts in order

Research shows that a quarter of UK small businesses lose an average of 10 hours per week to administrative tasks so it’s a wise move to use technology to cut back on the bureaucracy.

Tools like Dext makes it easy to instantly send receipts and other paperwork to your accountant.

If you use accounting software such as Xero and QuickBooks, you can give access to your accountant so they can easily check your records and accurately complete your tax return. 

Why you should file your tax return early

As a business owner, you have a lot to do and it’s easy to leave filing your tax return until the last minute. However, there are many benefits to doing it early.

Avoid errors

Rushing your tax return to meet the 31st January deadline can lead to errors. Tax is complex and you need to ensure you have enough time to give your accountant all the information that they need. Submitting your return at the last minute could also mean you miss out on opportunities to reduce your tax bill by not claiming all the reliefs too.

Accountants deal with a third of tax returns for their clients in January, so contacting yours early will make them very happy!

Steer clear of penalties

Every penny counts so don’t leave it so late that you miss the filing deadline. You’ll be hit by an automatic £100 filing penalty and if your tax return becomes more than three months late, it’s £10 daily penalties up to a maximum of £900.

A penalty of the higher of £300 or 5% of your tax due is then charged if your return is six months late and again if it’s over 12 months late.

Boost cash flow planning

In these times of economic challenges, filing early is very beneficial for your cash flow management. Knowing exactly how much tax is due in January and July if you’re making payments on account, means you can plan for how you will pay it. 

First time tax return filers can be surprised by the need for payments on account. Filing early means you can make sure you’re able to pay them or have time to set up a payment plan with HMRC if you can’t settle the bill in full. 

Receive tax refunds earlier

You may be due a tax refund and the sooner you file a tax return, the sooner you’ll receive it.  Reasons for tax refunds include excessive payments on account based on the previous year's income and HMRC making errors with tax codes.

We can help file your tax return

The best way to ensure your tax return is correct and submitted on time is to use an accountant.

For a fixed and competitive price, TaxAssist Accountants will take any worries away by completing your tax return, calculating your tax liability, filing the return online and liaising with you on the amounts to be paid and when they are due.

Call us today on 0131 665 0771 or fill in our online enquiry form.

Date published 20 Oct 2022 | Last updated 17 Apr 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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