If you are a sole trader in the UK, you will need to become familiar with Self-Assessment. This is the system that HM Revenue & Customs (HMRC) uses to collect Income Tax from people who do not have all their tax deducted at source, such as the self-employed.
The main part of Self-Assessment is the annual tax return. For many new business owners, the thought of filing their first tax return can be a source of significant anxiety. The good news is that with a little organisation, the process is much more manageable than you might fear. This guide is written to calmly explain what the tax return is and what you need to do as a sole trader.
What is a Self-Assessment Tax Return?
A Self-Assessment tax return (SATR) is a form you must complete each year to tell HMRC about all of your income and any allowable expenses you have had. This allows HMRC to calculate how much Income Tax and National Insurance you need to pay.
As a sole trader, you must report the income from your business, as well as any other income you might have (for example, from employment or renting out a property). You then deduct your allowable business expenses to arrive at your taxable profit. This is the figure that your tax will be calculated on.
The Key Deadlines
The tax year in the UK runs from 6th April to 5th April. The deadline for filing your Self-Assessment tax return online and for paying any tax you owe is 31st January following the end of the tax year. For example, for the 2025/26 tax year (which ends on 5th April 2026), the deadline is 31st January 2027.
It is very important to meet this deadline. There are automatic penalties for filing your return late and for paying your tax late.
What Information Do You Need?
To complete your tax return, you will need to have accurate records of your business finances for the tax year. This includes:
- Your total income: A record of all the sales you have made.
- Your total allowable expenses: A record of all the business expenses you have incurred.
You will also need details of any other income you have received. If you are also employed, you will need your P60 form from your employer, which summarises your salary and the tax you have already paid.
A statement of interest income received from any personal savings accounts (ISA accounts are not affected and are not required (however this may be changing soon)).
Any charitable donations/sponsorships can be claimed as an allowable expense and reduce your self assessment tax bill.
Student Loans in Self Assessment — Why You Include It
When you’re employed, your employer deducts student loan repayments automatically through PAYE — you never have to think about it. But when you’re self-employed, there’s no employer doing that for you, so HMRC needs to calculate and collect your repayments through Self Assessment instead.
How repayments are calculated
Your repayments are based on your income above a threshold (which depends on your loan plan type). For example, Plan 2 is currently £27,295 — you repay 9% of anything you earn above that.
HMRC can’t know what you earned as self-employed until you file your return, so the repayment is worked out at that point and added to your tax bill.
It gets added to what you owe
Once your return is filed, your student loan repayment is simply bolted onto your overall Self Assessment bill, alongside your Income Tax and National Insurance. You pay it all together by 31 January.
Two things worth knowing
- If you’re also employed part-time, some repayments may already have been deducted through PAYE. Your Self Assessment will account for this so you don’t pay twice.
- It feeds into Payments on Account — student loan repayments are not included in the calculation for payments on account (unlike tax), so that’s one less thing inflating those advance payments.
In short:
HMRC has no other way to collect it from a self-employed person. Your tax return is the mechanism they use.
Payments on Account — Simplified
When you owe more than £1,000 in Self Assessment tax, HMRC doesn’t just let you pay it once a year. Instead, they ask you to pre-pay next year’s tax bill in advance in two instalments. These are called Payments on Account.
There will be a separate article dedicated to explaining this in full detail, please keep an eye out for it!
How to File Your Tax Return
The easiest and most common way to file your tax return is online through the HMRC Self-Assessment portal. You will need your Unique Taxpayer Reference (UTR) number and your Government Gateway user ID and password to log in.
The online form will guide you through the process, asking you to fill in different sections depending on your circumstances. As a sole trader, you will need to complete the main tax return (SA100) and the self-employment supplementary pages (SA103).
Once you have entered all your income and expenses, the online system will automatically calculate your tax and National Insurance liability for you. It will show you exactly how much you owe.
Making Tax Digital for Income Tax
It is also important to be aware of the upcoming changes for Making Tax Digital for Income Tax (MTD for ITSA). As of April 2026, if you are a sole trader with an annual income of over £50,000 (this threshold figure is being reduced to £30,000 by HMRC from April 2027). You need to use MTD-compatible software to keep digital records and send quarterly updates of your income and expenses to HMRC. This replaces the single annual Self-Assessment tax return.
When Getting Advice Can Help
Filing your first Self-Assessment tax return can be a confusing process. It is easy to make mistakes or to miss out on claiming all the expenses you are entitled to. You are not expected to be a tax expert, and getting professional advice can save you time, stress, and money.
If you would like calm, practical support. Penney’s Accountancy works with UK small businesses in and around Farnborough and the surrounding areas. We can prepare and file your Self-Assessment tax return for you, ensuring it is accurate, on time, and as tax-efficient as possible.
Want to Learn More in Your Own Time?
For those who want to build their confidence and understand these topics in more detail, Penney’s Finance School offers an online, self-paced business and finance course. It covers everything from company setup to cash flow and tax, allowing you to learn at your own pace.
Important information
The information provided in this article is intended as general guidance for UK businesses only. UK tax legislation and HMRC guidance as of February 2026.
Tax rules and business requirements can change, and individual circumstances vary. Before acting on any of the information above, we recommend speaking to a qualified accountant who can provide advice tailored to your specific situation.