How to complete self-assessment as a sole trader

Register for self-assessment for self-employed

As a sole trader, you’re required by law to pay tax through self-assessment. You must file a tax return every year to notify HMRC of your earnings.

To do this you must first register for self-assessment.

If this is your first year of filing a tax return, you will need to register for both self-assessment and Class 2 National Insurance. Registration must be completed by 5th October in your second tax year – you could be fined if you don’t meet this deadline.

You can register for self-assessment using your business tax account. You will need a Government Gateway User ID and password to access this.

If you do not have this information, you will be able to create a User ID online. Once you have done this, you will receive a letter within 10 days containing your Unique Taxpayer Reference (UTR).

Use your UTR number to set up a Government Gateway account

Your UTR is essential. It is a 10-digit number assigned to you to enable you to identify yourself when completing self-assessment.

When you register for self-assessment, you will automatically be sent a letter by post containing your UTR.

If you cannot find or access your UTR, HMRC can assist. Information on retrieving lost UTR numbers can be found on the government website.

Once you have your UTR, you can prepare all the information you need to complete your self-assessment.

Self-assessment tax returns can be completed on paper or online. For paper tax returns the deadline is Midnight 31st October (current calendar year).

For online tax returns the deadline is Midnight 31st January (following calendar year). Online tax returns provide greater flexibility and have a later deadline, so we would recommend filing online where possible.

Ensure you have all the required information before starting

Before you start filling in your self-assessment, you must have certain information available.

There’s a lot of sections to fill in and having all of your finances to hand will really help make the process just that little less stressful.

To complete self-assessment, you will need (if applicable to you):

• Your UTR
• Your National Insurance Number
• Full income details: P60, P45, P11D form, P2 coding notice
• Details of any business-related expenses
• Information on any rent received
• Bank interest details
• Overseas income
• Income received from a partnership
• Details of dividends received
• Capital gains information
• State taxable benefits received
• Gift Aid contributions
• Pension contributions
• Tax payments already paid

All information you submit should only refer to the previous tax year: 6th April of the previous year to 5th April of the current year.

All sound pretty overwhelming?

Hiring an accountant is an option, but they can be pretty expensive.

What if we told you there’s a finance app that could help you keep track of your finances and even help you to submit your self-assessment through the software itself?

Checkatrade members get an exclusive deal with Powered Now – a finance software for trade business owners.

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Complete the sections that apply to you

Self-assessment tax forms may seem daunting. It’s important to remember, however, that you only need to complete the sections that apply to you and your business activity.

For example, from the list above, you may not have received overseas income or made any pension contributions, so these sections will not apply to you.

Comprehensive guidance is provided by HMRC alongside the self-assessment form. This information is useful to understand what information is required from you.

Follow the steps, read the requirements carefully and take your time.

Submit your self-assessment tax return

It is important that you carefully complete your self-assessment tax return. Take your time to re-check all the information is correct before submitting.

With online tax returns, you can save the information as you go and edit the form where necessary.

Once you’re happy that all the information is accurate and complete, you can press submit.

Then what happens?

When you submit your self-assessment tax return you will receive confirmation from HMRC including a code number. Keep a note of this number for future reference.

Once your tax return is received by HMRC, they will immediately calculate how much tax you owe.

The deadline for paying any tax from the previous year’s earnings is 31st January. If your payment is late, you will be charged interest on the amount owed and may receive a fine.

Pay your tax return

Payment methods for your tax return vary on the time you require the payment to take. You can pay your owed tax amount in the following ways:

Same day or next day payment:

• Online banking
• Telephone banking
• CHAPS (Clearing House Automated Payment System)
• Debit or corporate credit card
• At a bank or building society

Within 3 working days

• Bacs
• Direct Debit (this must have been previously set-up with HMRC)
• Postal cheque

Within 5 working days

• Direct Debit (if not already set-up with HMRC)

Keep a record of your tax returns

Keeping a record of your tax returns will give you easy access to any information if required. If HMRC decides to investigate a tax return, you will need evidence of receipts, bank statements etc. as proof of earnings and deductions.

As a sole trader, you should keep records of your tax returns for at least five years.

Self-assessment FAQs

Can I do self-assessment myself?

Yes you can. Although, if you need support with your tax return then as a Checkatrade member, you can get the help of our partner over at Powered Now.

Their software helps you manage your finances and keep everything to run your business in one place. It also links to HMRC for completing your self-assessment.

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How do I fill out a self-assessment?

You can fill-out a self-assessment form online or on paper forms.

How can I claim mileage allowance relief on self-assessment?

Keep a record of your business mileage. Use the self-assessment form to calculate your mileage tax relief.

There will be a section on the self-assessment form for you to enter your mileage.

How do I pay self-assessment tax?

Same day or next day payment: online banking, telephone banking, CHAPS (Clearing House Automated Payment System), debit or corporate credit card, at a bank or building society

Within 3 working days: Bacs, Direct Debit (this must have been previously set-up with HMRC), Postal cheque

Within 5 working days: Direct Debit (if not already set-up with HMRC)

How do I claim tax relief on a self-assessment form?

Complete the section on tax relief and deductions.