Self Assessment Tax Return: The Complete Guide for UK Sole Traders 2026/27

Self Assessment is the system HMRC uses to collect Income Tax from people whose tax is not fully collected through PAYE. If you are self-employed, a landlord, or have other untaxed income, you almost certainly need to file a Self Assessment tax return. This comprehensive guide covers everything you need to know for the 2026/27 tax year.

Who Needs to File Self Assessment?

You must file a Self Assessment return if you:

• Are self-employed and earn more than £1,000 per year (after the trading allowance)
• Are a partner in a business partnership
• Have rental income from property
• Have income from savings, investments, or dividends above certain thresholds
• Are a company director (with some exceptions)
• Have foreign income
• Have capital gains to report
• Are a higher-rate taxpayer with certain types of income
• Need to claim certain tax reliefs or allowances

If any of these apply, you need to register for Self Assessment (if you have not already) and file a return each year.

Key Dates for 2026/27

| Date | What happens | |------|-------------| | 6 April 2026 | 2026/27 tax year starts | | 5 April 2027 | 2026/27 tax year ends | | 5 October 2027 | Deadline to register for Self Assessment if you are newly self-employed | | 31 October 2027 | Deadline for paper returns (though paper is being phased out) | | 31 January 2028 | Deadline for online returns and paying the tax you owe | | 31 July 2028 | Deadline for second payment on account |

How to Register

If you are newly self-employed, register with HMRC as soon as possible after you start trading:

1. Go to GOV.UK and search for "register for Self Assessment"
2. Create a Government Gateway account if you do not have one
3. Register as self-employed (form CWF1 is done online)
4. HMRC will issue your Unique Taxpayer Reference (UTR) within 10 working days
5. You can then file your return online using your UTR and Government Gateway login

If you are already registered, you do not need to re-register each year.

What Information You Need

To complete your Self Assessment return, gather:

Income:

• Total business sales or turnover
• Any other self-employment income
• Rental income from property
• Employment income (from your P60 or payslips)
• Savings interest (from your bank)
• Dividend income (from dividend vouchers)
• Any other taxable income

Expenses:

• All business expenses by category
• Capital allowance claims
• Pension contributions
• Gift Aid donations
• Student loan information

Other:

• Your UTR
• Your National Insurance number
• Bank details for any refund
• Last year's tax return (for reference)

Tax Rates for 2026/27

Income Tax

| Band | Taxable income | Rate | |------|---------------|------| | Personal allowance | Up to £12,570 | 0% | | Basic rate | £12,571 – £50,270 | 20% | | Higher rate | £50,271 – £125,140 | 40% | | Additional rate | Over £125,140 | 45% |

The personal allowance reduces by £1 for every £2 of income above £100,000, reaching zero at £125,140.

National Insurance (Self-Employed)

Class 2: £3.45 per week if profits exceed £12,570 (included in your Self Assessment calculation)

Class 4:

• 6% on profits between £12,570 and £50,270
• 2% on profits above £50,270

Allowable Business Expenses

As a sole trader, you can deduct legitimate business expenses from your income to reduce your tax bill. Common categories include:

Office and premises:

• Rent and rates
• Utilities (business proportion)
• Home office costs (flat rate or actual)
• Repairs and maintenance

Travel:

• Business mileage (45p for first 10,000 miles, 25p thereafter)
• Public transport for business journeys
• Hotel accommodation for business trips
• Parking fees

Staff and professional:

• Employee wages and NI
• Subcontractor payments
• Accountancy fees
• Legal fees
• Professional subscriptions

Marketing and technology:

• Advertising and marketing
• Website costs
• Software subscriptions
• Phone and internet (business proportion)
• Computer equipment

Financial:

• Bank charges and interest
• Insurance premiums
• Bad debts written off

How to Reduce Your Tax Bill Legally

Claim all allowable expenses. Many sole traders underclaim expenses, paying more tax than necessary. Review the full list of allowable expenses and ensure you are claiming everything you are entitled to.

Use the Annual Investment Allowance (AIA). You can claim the full cost of qualifying equipment and machinery up to the AIA limit (currently £1 million) in the year of purchase.

Make pension contributions. Personal pension contributions receive tax relief at your marginal rate. A £10,000 pension contribution effectively costs £8,000 for a basic-rate taxpayer or £6,000 for a higher-rate taxpayer.

Use your partner's tax position. If your spouse or civil partner pays tax at a lower rate, consider whether income can legitimately be attributed to them (for example, if they work in the business or jointly own a rental property).

Claim working from home. If you work from home, claim the simplified flat rate (£6/week without evidence) or calculate your actual home office costs.

Carry forward losses. If your business makes a loss, you can carry it forward against future profits or, in some cases, set it against other income.

Filing Your Return

Online Filing

Most people file online through HMRC's website:

1. Log in to your Government Gateway account
2. Navigate to your Self Assessment return
3. Complete each section of the return
4. Review the tax calculation
5. Submit the return
6. Pay any tax owed by 31 January

Using Software

You can also file through MTD-compatible software or Self Assessment software. Accounted prepares your return data throughout the year and handles filing for you.

Payments on Account

If your Self Assessment bill is more than £1,000 (and less than 80% is collected at source through PAYE), you will need to make payments on account — advance payments towards next year's tax bill.

Each payment on account is half of the previous year's tax bill:

• First payment on account: 31 January (alongside your balancing payment)
• Second payment on account: 31 July

If your income changes significantly, you can apply to reduce your payments on account. But be careful — if you reduce them too much and end up owing more, you will pay interest on the shortfall.

Common Mistakes to Avoid

Missing the deadline. Late filing triggers an automatic £100 penalty, even if you owe no tax. Further penalties apply at 3 months, 6 months, and 12 months late.

Forgetting to include all income. HMRC receives information from employers, banks, and platforms. If your return does not match their records, they will investigate.

Overclaiming expenses. Only claim expenses that are genuinely for business purposes. Mixed-use expenses must be apportioned.

Not keeping records. You must keep records for at least five years after the filing deadline. If HMRC enquires and you cannot support your figures, penalties may follow.

Ignoring payments on account. If you have not budgeted for payments on account, the combined January bill (balancing payment plus first payment on account) can be a nasty shock.

Getting Help

If your tax affairs are complex, consider using an accountant. For straightforward sole trader returns, software like Accounted can handle everything — from record keeping through the year to filing your return.

Accounted handles your bookkeeping, tax estimates, and MTD submissions automatically. Start your free trial — no credit card required.