How to do self-employed taxes and tax returns

If you’ve recently started working for yourself, then working out how to do taxes as a self-employed person can seem daunting, particularly if you’ve chosen to do your tax return yourself.

You’ll be responsible for submitting accurate information on your income, expenses and situation to HMRC for the tax year in question.

The good news is that, with a little preparation and knowledge, submitting your tax return can be a stress-free process.

What is a tax return?

A self-employed tax return is how you, a self-employed person, inform HMRC of your net income in a given financial year, which determines how much tax you need to pay.

Unlike contracted employees, who pay their taxes through PAYE. Self-employed workers must submit their details, income, expenses and other financial information through HMRC.

This tax return will tell them how much tax they owe.

How to file taxes when self-employed

Working out how to file your taxes when you’re self-employed might seem daunting, but the actual filing part is simple.

You can submit your tax return either on paper through form SA100, or file your self-assessment tax return online at the HMRC website.

While HMRC doesn’t provide a self-employed tax return example to download, you can find form SA100 on their website.

If you’re filing your taxes online, here’s a quick guide to the self-assessment tax return process:

1. Register for self-assessment: You’ll need to register for a self-assessment tax return by the 5^{th of} October in your business’s second tax year
2. Make sure you have your income and expenditure details to hand: You should have all of your invoices and receipts to hand so you can work out your total taxable profit.
3. Report on your earnings You’ll need to fill in the relevant sections on the online form to tell HMRC what you’ve earned, including your turnover before expenses
4. Add your expenses: This is where good record-keeping is essential. Subtract your self-employed allowable expenses from your turnover – check out our guide to business expenses if you’re not sure what these are.
5. Double-check the details: You don’t need to worry about how to work out your self-employed tax return. HMRC will calculate the tax you owe based on the information you’ve given, as well as any National Insurance contributions.
6. Pay your tax bill: Once you’ve filed your self-assessment tax return, you’ll be given a reference number. You can pay in lots of different ways – check HMRC’s guide to paying your tax bill for more information.

Self-employed tax return calculator

PAYE workers pay tax through each pay packet so HMRC is always up to date. However, self-employed workers pay in two lump sums in January and July.

This is why it’s useful to calculate how much you owe ahead of the payment deadline day.

Using the HMRC-ready reckoner tool is always the best way to calculate your tax bill. You can make a rough calculation of what you’ll owe on your self-employed return. To do this, deduct your expenses from your income and subtract your Personal Allowance (£12,570 in 2023/24).

Then work out 20% (£12,571 to £50,270), 40% (£50,271 to £150,000) or 45% (over £150,000) of that figure. This will depend on your profit. But as mentioned, the ready reckoner tool is best for an accurate figure.

Do I need to do a tax return?

HMRC guidance on this is clear. If you answer ‘yes’ to the following two questions and your work status meets the criteria, then you need to submit a self-employed tax return (financial year 2023/24 used as an example):

1. Did you work for yourself between 6 April 2023 and 5 April 2024?
2. Did you earn more than £1,000 from working for yourself?

You can use the HMRC website to check whether your work status means you need to submit a self-employed tax return.

Do I need to do a tax return if I earn under £10,000

In most cases, yes. However, depending on your work status and how you earned the income, it’s possible that you may not have to.

There are a number of contributing factors in establishing whether you need to submit a return. The best way to know for sure is to use the online HMRC tool linked above.

Late tax return penalties

If you miss the final deadline of January 31st for submitting and paying your tax return (or 31st July for your second payment on account) you’ll be charged a penalty. This is unless you’ve entered into an agreement with HMRC before the deadline:

• Penalty for late filing – The penalty for filing tax returns up to three months late is £100, with a higher penalty if filed later.
• Penalty for late payment – If you don’t pay your tax bill on time you’ll receive a late payment penalty and be charged interest on any money owed. It’s always good to pay anything you can before the deadline to reduce the amount you’ll be charged interest on.
• Exceptions – If you’ve entered into an agreement with HMRC, you may be able to avoid late filing and payment penalties.

Self-employed tax return tips

Your first self-employed tax return can be a worrying task to complete, but with preparation and patience, it should be easy to do.

Here’s what to consider:

1. Put everything in a spreadsheet

Right from your first year of being self-employed, get into the habit of keeping your books in order. Record your income and outgoings in a spreadsheet as they happen.

This way, when it comes to doing your tax return, you’ll have most of what you need ready to enter. This will save you time, hassle, and stress.

2. Submit as soon as you can

While it may seem like you have plenty of time (April – Jan) to submit your tax return, it’s advisable to do it as soon as possible. This is so you know how much you’ll need to pay.

This way, you can either pay it straight away or pay into your HMRC account each month. By doing this, you can avoid a big bill at the deadline.

3. Prepare for a big bill

When it comes to making your initial January payment on your first tax return, you won’t just pay what you owe. You’ll also need to pay half again as a ‘payment on account’.

This is a payment towards the following tax year’s bill to help you get ahead. You’ll also have no previous payments towards your bill, so be sure to set aside everything you owe in preparation.

4. Remember your expenses

As a self-employed worker, you may have to pay for utilities, equipment, fuel, a car, uniform, and contractors. All of these are allowable business expenses.

Be sure to record all of your allowable business expenses throughout the year and enter them on your tax return. They will reduce your profit and therefore the amount of income tax you need to pay.

Check out our guide to claiming expenses for your trade business for more information.

5. Consider using an accountant

Just because it’s called self-assessment, it doesn’t mean you have to submit your tax return yourself. An accountant can submit it for you if you supply them with the necessary information.

You can use our accountant cost guide to get an idea of fees, which are allowable business expenses and will reduce the amount of tax you owe.

Self-employed tax return FAQs

What can I claim for on my self-employed tax return?

You can claim a number of costs as allowable expenses as a self-employed worker.

These include office costs, travel costs, staff costs, heating, lighting, business rates, advertising or marketing costs.

You can even cover training courses. HMRC provide a full list of what you can claim for.

How do I fill in a self-employed tax return?

You have a few options. You can download form SA100, complete it and post it to HMRC. Or you can register on the HMRC website and file an online tax return.

Alternatively, you could hire an accountant to complete your self-employed tax return for you.

Should I use an accountant for my self-employed tax return?

This is entirely a personal preference. The benefits of using an accountant are you don’t have to spend the time submitting your tax return personally. And you know it will be completed as professionally and tax-efficiently as possible.

The flip side is you’ll pay for this service, but their fee is an allowable business expense.

Can I do my own taxes if self-employed?

Yes, and HMRC has made it as easy as possible for you to do your self-employed tax return. Online is the most streamlined way to submit your return.

The process is broken down into clear steps and questions. You can save your progress and return it later, and once submitted you have a simple breakdown of what you owe.

What is the self-employed tax return date?

There are three main self-assessment dates to highlight in your calendar:

• 31st October – This is the deadline for the paper submission of your tax return.
• 31st January – This is the online submission deadline and the final deadline for your self-assessment return for a tax year. It’s also the deadline to pay the tax you owe and half of next year’s bill (first payment on account).
• 31st July – This is the date of the second payment on account, where you pay the second half of what you’re projected to owe next tax year.