What Is Self Assessment?
Self Assessment is HMRC’s system for collecting Income Tax from individuals and businesses that do not have their income taxed automatically. This typically includes people who are self-employed or landlords, as well as individuals with other sources of untaxed income such as dividends, savings, or overseas earnings.
The system requires individuals to report their income and any allowable expenses by filing an annual tax return. Based on the information provided, HMRC calculates how much tax you owe. You then pay the amount due by the deadline, which falls on 31 January each year for online submissions.
Why Self Assessment Is Important for Sole Traders and Landlords
Self Assessment ensures that everyone who earns income outside traditional employment contributes the correct amount of tax. If you are a sole trader or landlord, your earnings are not subject to Pay As You Earn (PAYE), meaning no tax is deducted automatically. It becomes your responsibility to inform HMRC of your income and pay the required tax.
Failing to register or submit your tax return on time can lead to penalties, interest charges, and possibly further action by HMRC. Proper registration and filing also ensure you remain eligible for tax reliefs and deductions, and help avoid future complications.
Who Needs to Register for Self Assessment?
You must register for Self Assessment if any of the following apply to you for the first time in a given tax year:
- You are a sole trader and earned more than £1,000 in gross income (before deducting expenses)
- You are a partner in a business partnership
- Your total taxable income for the year was over £100,000
- You received untaxed income from tips, commissions, dividends, savings interest, or overseas income
- You had taxable capital gains from selling property, shares, or other assets
- You need to pay the High Income Child Benefit Charge
- You earn rental income that exceeds the annual threshold and must be reported
Each of these circumstances triggers the requirement to register for Self Assessment. Even if you are unsure whether your income qualifies, it is better to register than to risk penalties later.
Property Income and Self Assessment Obligations
If you earn money by renting out property, you need to be aware of specific thresholds and allowances that determine whether a tax return is required.
The first £1,000 of property rental income is tax-free. This is referred to as the Property Allowance. If your annual rental income exceeds £1,000, you may still not need to file a return, depending on whether you are claiming expenses.
You must file a Self Assessment tax return if:
- Your rental income is between £2,500 and £9,999 after allowable expenses
- Your rental income is £10,000 or more before expenses
This applies whether you are letting out residential, commercial, or furnished holiday lettings in the UK or abroad.
Allowable Expenses for Landlords and Sole Traders
Allowable expenses are costs incurred in the day-to-day running of your business or rental property that HMRC permits you to deduct from your income. These deductions help reduce your overall tax bill.
For sole traders, typical allowable expenses include:
- Equipment and tools necessary for your trade
- Office costs such as stationery and utilities
- Business-related travel and vehicle expenses
- Marketing and advertising costs
- Business insurance and professional fees
For landlords, allowable expenses may include:
- Maintenance and repairs
- Letting agent and management fees
- Property insurance
- Utility bills and council tax (if paid by the landlord)
- Interest on mortgages (restricted to basic rate relief)
Carefully tracking and recording all allowable expenses throughout the year will make completing your tax return much simpler and more accurate.
When to Register for Self Assessment
You must register by 5 October following the end of the tax year in which you started earning untaxed income. The UK tax year runs from 6 April to 5 April.
For example, if you became self-employed or started earning rental income during the 2024–2025 tax year (between 6 April 2024 and 5 April 2025), you must register by 5 October 2025. This provides HMRC with sufficient time to set up your account and issue the necessary documents for filing your return.
Failing to register on time can lead to a delay in receiving your Unique Taxpayer Reference (UTR), which you will need in order to file your return. It can also result in penalties if the delay causes you to miss the return deadline.
Why Early Registration Is Recommended
Although you have until October to register, doing it earlier has several advantages. First, it gives you more time to become familiar with HMRC’s online system. It also allows you to start gathering the documentation you’ll need, such as income records, invoices, and receipts for expenses.
Early registration also ensures that your UTR arrives in time, enabling you to meet the 31 January deadline for online submissions. The extra time is especially helpful if you’re new to Self Assessment and unfamiliar with the process.
How to Register for Self Assessment as a Sole Trader
If you are self-employed, registering for Self Assessment is a two-part process. You must register both for Self Assessment and to pay Class 2 National Insurance contributions.
Start by setting up a Government Gateway account through GOV.UK. You’ll need to provide:
- Your name and email address
- A secure password and a recovery word
Once your Government Gateway account is set up, you can begin the Self Assessment registration. You will be asked for:
- Your full name and date of birth
- Your National Insurance number
- Your business start date
- The nature of your business or trade
- Your home and business addresses
Once your registration is accepted, HMRC will send your UTR to your registered address. This usually takes about 15 working days, or up to 21 days if you are based outside the UK.
Registering for Self Assessment If You’re Not Self-Employed
If you are not self-employed but still need to report income — for example, from rental properties, dividends, or investments — you can register online in a similar way.
You will still need to create a Government Gateway account and provide:
- Your full name, date of birth, and contact information
- Your UK address (or overseas address if applicable)
- Your National Insurance number
- The reason for registering, such as rental income or investment gains
As with self-employed individuals, you will receive your UTR by post, which you will need to file your tax return.
Information You Will Need When Registering
When completing your Self Assessment registration, make sure you have all necessary details at hand. The form cannot be saved midway, so it’s essential to be fully prepared before starting.
You will typically need:
- Your personal details including full name and date of birth
- National Insurance number
- Contact details (email, phone number, postal address)
- Details about your business if self-employed
- The date your business or property income started
- A description of the work you do or the type of property income received
Providing accurate and complete information from the start will help avoid delays or additional queries from HMRC.
Keeping Your Account Secure
Once your Self Assessment account is active, safeguarding your login information is crucial. Never share your Government Gateway ID or password with anyone. If you use an accountant or tax advisor, they can be granted access to your account through HMRC’s agent authorisation process without needing your login credentials.
Always log out of your HMRC account after use and keep your password and recovery details stored securely. If you suspect any suspicious activity, contact HMRC immediately to protect your account and prevent potential misuse.
A Step-by-Step Guide for Sole Traders and Landlords
Once you’ve registered for Self Assessment, the next responsibility is submitting your tax return each year. Filing a Self Assessment tax return can feel overwhelming the first time, especially if you’re unfamiliar with the process. This comprehensive guide walks you through what needs to be done, what records to keep, and how to accurately report your income and claim expenses.
Whether you’re a sole trader, a landlord, or someone with additional sources of untaxed income, understanding the correct procedure will help you avoid penalties, stay compliant, and ensure you only pay what you owe.
What Is a Self Assessment Tax Return?
A Self Assessment tax return is an official document submitted to HM Revenue and Customs (HMRC), detailing all taxable income you earned during the previous tax year. You must also report allowable expenses and any tax reliefs or deductions you are entitled to claim.
HMRC then uses this information to calculate how much tax and National Insurance you need to pay. The return includes various sections that apply depending on the type of income you receive, such as self-employment profits, rental income, or savings and investment earnings.
Tax Year Deadlines You Need to Know
The UK tax year runs from 6 April to 5 April. After the end of the tax year, you have until the following 31 January to submit your online Self Assessment return. Paper returns must be filed by 31 October.
For example, for the tax year from 6 April 2024 to 5 April 2025:
- Register for Self Assessment by 5 October 2025
- Submit paper tax return by 31 October 2025
- Submit online tax return and pay any tax due by 31 January 2026
Missing these deadlines results in automatic penalties, starting with a £100 late filing fine.
Getting Ready: What Records Should You Keep?
Before filing your return, it’s crucial to have accurate and complete records. These documents support the information you include in your tax return and may be required if HMRC requests evidence or opens an enquiry.
For sole traders, keep records such as:
- Sales invoices and receipts
- Purchase invoices and expense receipts
- Bank statements
- Mileage logs for business-related travel
- Details of equipment or assets used in your business
For landlords, useful records include:
- Rental agreements and tenant details
- Rent received and payment schedules
- Maintenance and repair invoices
- Letting agent statements and fees
- Mortgage interest statements
You should retain these records for at least five years after the 31 January filing deadline in case HMRC needs to review them.
Logging In to File Online
To file your tax return online, log in to your HMRC account using your Government Gateway credentials. If you have multiple sources of income or complex tax affairs, the system will direct you to complete the main return along with relevant supplementary pages.
Once logged in, navigate to the Self Assessment section, where you’ll find the option to file your return for the relevant tax year.
Understanding the SA100 Tax Return Form
The SA100 is the main Self Assessment tax return form. It includes sections for a wide range of income types and personal details. Here are the key components:
- Personal information: Includes name, date of birth, address, and National Insurance number
- Income: Earnings from employment, self-employment, pensions, savings, and property
- Tax reliefs: Contributions to pensions, charity donations, and other reliefs
- Student loans: If applicable, repayment amounts will be calculated based on your income
- Bank details: For any tax refund you may be due
After completing the main SA100 form, you’ll need to fill out additional pages specific to your income type.
Completing the Self-Employment (SA103) Section
If you are a sole trader, you will need to complete the SA103 supplementary pages. There are two versions of this form: the short version (SA103S) and the full version (SA103F).
Use the short version if your turnover was below the VAT threshold and your business is relatively simple. Use the full version if your turnover was higher or if your accounts are more complex.
The self-employment section asks for:
- Your business name and description
- Trading start and end dates (if different from the tax year)
- Income and turnover for the year
- Allowable business expenses
- Capital allowances (if claiming for business equipment)
- Net profit or loss
If you have more than one sole trader business, you must complete a separate section for each.
Completing the Property Income (SA105) Section
If you received rental income during the tax year, complete the SA105 supplementary pages. You’ll need to report:
- Total rental income received
- Allowable expenses related to the property
- Capital allowances, if applicable
- Any unused losses from previous years
- Net income from property
This section applies whether you’re letting out a single residential property, multiple properties, furnished holiday lettings, or overseas rentals.
Claiming Allowable Expenses
When completing your return, you can deduct allowable expenses from your income to reduce your tax bill. This applies to both sole traders and landlords.
Examples for sole traders include:
- Office supplies and phone bills
- Business premises rent and utilities
- Advertising and marketing
- Business-related travel and fuel
- Accounting and professional fees
Examples for landlords include:
- Repairs and maintenance
- Insurance premiums
- Water rates, council tax (if paid by landlord)
- Letting agent fees
- Accountancy services
Claiming accurate expenses ensures you pay the correct amount of tax and helps avoid errors that could trigger a review by HMRC.
Using Simplified Expenses
Sole traders and partners can use simplified expenses for some types of costs. This involves using flat rates rather than calculating actual costs. It can be applied to:
- Business mileage (cars, vans, motorcycles)
- Use of home for business purposes
- Living on your business premises
Using simplified expenses is optional but can make record-keeping and calculations easier.
What If You Made a Loss?
If your business or property income resulted in a loss, you can carry that loss forward to offset against future profits. Alternatively, in some cases, you can carry the loss back or use it to offset other income in the same tax year.
When entering figures into your Self Assessment return, make sure you clearly indicate if the figures represent a loss. HMRC will apply the appropriate rules based on the information you provide.
Checking and Submitting Your Return
After filling in all required sections, take the time to carefully review each part of your return. Look for common errors such as:
- Typos in income or expense figures
- Omissions of income from savings or dividends
- Misclassified expenses
- Incorrect National Insurance number
Once you are confident that everything is correct, submit your return online. You will receive a confirmation that it has been received, along with a reference number. Save this for your records.
What Happens After Submission?
After your return is submitted, HMRC will process it and calculate how much tax you owe. This calculation takes into account your total income, allowable expenses, and any reliefs or payments on account you have already made.
HMRC will issue a tax calculation statement. You can view this through your online account or receive it by post, depending on your preferences. If you are due a refund, it will usually be paid into your bank account within a few weeks. If you owe tax, you must pay it by the 31 January deadline to avoid interest and penalties.
Payments on Account
If your tax bill is more than £1,000 and less than 80 percent of your tax is collected at source, you may be required to make payments on account for the next tax year. These are advance payments toward your next Self Assessment bill.
Payments on account are due in two instalments:
- First payment by 31 January
- Second payment by 31 July
Each payment is half your previous year’s tax bill. If your actual income ends up being lower the following year, you can request to reduce the payments.
Amending Your Tax Return
If you realise you’ve made a mistake on your return, you can make changes online within 12 months of the filing deadline. For example, for the 2024–2025 tax year, you can make amendments until 31 January 2027.
Log into your online account, select the tax return you wish to change, and update the relevant fields. Once submitted, HMRC will issue a new calculation based on your updated figures.
Common Mistakes to Avoid
Filing a Self Assessment tax return can be straightforward, but several common mistakes can lead to delays or penalties:
- Forgetting to include all sources of income
- Missing the filing deadline
- Claiming personal expenses as business deductions
- Not updating your business address or personal details
- Misreporting rental income or forgetting to include joint ownership
Double-check your return before submission to ensure all information is complete and accurate.
Paying Your Self Assessment Tax Bill and Managing Your Tax Account
After registering and filing your Self Assessment tax return, the next critical step is paying your tax bill accurately and on time. Understanding how to interpret your tax calculation, when and how to make payments, and how to manage your tax account can help you stay compliant and avoid costly penalties or interest charges.
This guide also covers what to do if you stop being self-employed, how to keep your HMRC records up to date, and what support is available if you’re struggling to pay your tax bill. Whether you’re a new sole trader or a landlord with years of experience, managing your Self Assessment obligations efficiently is essential.
How HMRC Calculates Your Tax Bill
Once your Self Assessment return is submitted, HMRC reviews the information to determine how much Income Tax and National Insurance you owe. The amount depends on your total income from all sources, minus any allowable expenses and applicable tax reliefs.
For sole traders, this typically includes Class 2 and Class 4 National Insurance contributions in addition to Income Tax. For landlords, the tax due is usually limited to Income Tax on rental profits, unless property letting is treated as a business.
Your tax bill is calculated based on:
- Your total taxable income
- Tax-free personal allowance
- Any allowable business or property expenses
- Other reliefs and adjustments (such as pension contributions or trading losses)
You can view your tax calculation in your HMRC online account under the Self Assessment section. This breakdown will show your total tax due and the payment deadlines.
Key Tax Payment Deadlines
Self Assessment tax payments follow a strict timeline. Missing these deadlines can lead to fines and interest on the outstanding balance.
Important dates to remember:
- 31 January: Deadline for filing your return and paying any tax you owe for the previous tax year. Also the deadline for the first payment on account for the following tax year.
- 31 July: Deadline for the second payment on account.
If your tax bill exceeds £1,000 and less than 80 percent of it is collected at source (such as through PAYE), you are usually required to make payments on account toward next year’s bill.
What Are Payments on Account?
Payments on account are advance payments toward your next Self Assessment tax bill. These payments help spread the cost of your annual bill across the year, reducing the burden the following January. Each payment is equal to half of the previous year’s tax bill, excluding student loan repayments or Capital Gains Tax. These payments are due by 31 January and 31 July each year.
For example, if your 2024–2025 tax bill was £4,000, you would make two payments on account of £2,000 each for the 2025–2026 tax year. If your actual income for the following year is lower, you can request a reduction in your payments on account via your online account or by submitting form SA303.
Methods of Payment
HMRC offers several ways to pay your tax bill. Each method has a different processing time, so it’s important to plan ahead to ensure your payment is received by the deadline.
Accepted payment methods include:
- Online or telephone banking using Faster Payments
- Debit card or corporate credit card via HMRC’s payment portal
- Direct debit (single payment or budget payment plan)
- Bank transfer (BACS or CHAPS)
- At your bank or building society (with a paying-in slip)
- By cheque through the post
Avoid paying by cheque close to the deadline, as postal delays can result in late payment penalties.
Setting Up a Budget Payment Plan
If you prefer to spread the cost of your tax bill, HMRC allows you to set up a Budget Payment Plan. This option enables you to make regular weekly or monthly payments toward your next Self Assessment bill.
You can start a Budget Payment Plan at any time via your online account. The amount and frequency of payments are flexible, and you can pause or amend the plan whenever needed. This approach can help sole traders and landlords manage cash flow, particularly those with fluctuating income throughout the year.
Paying in Instalments Using a Time to Pay Arrangement
If you cannot afford to pay your full tax bill by the deadline, you may be able to set up a Time to Pay arrangement with HMRC. This allows you to pay your tax in manageable monthly installments.
To qualify, you must:
- Owe less than £30,000
- Have no outstanding tax returns
- Be within 60 days of the payment deadline
You can apply online through your Self Assessment account. If approved, you’ll agree to a direct debit plan for regular monthly payments. Interest will apply to the balance, but this is often a better option than facing escalating penalties for non-payment. If you owe more than £30,000 or need longer than 12 months to repay, you’ll need to call HMRC directly to discuss alternative arrangements.
Penalties for Late Payment
HMRC imposes penalties and interest for failing to pay your Self Assessment tax bill on time.
Penalty structure:
- Day 1: £100 fixed penalty for missing the filing deadline, even if there’s no tax to pay
- 30 days late: 5 percent of the unpaid tax
- 6 months late: Additional 5 percent
- 12 months late: Further 5 percent
In addition to these penalties, daily interest will be charged on any outstanding balance. Keeping track of deadlines and arranging payments in advance can help avoid unnecessary costs.
Managing Your Self Assessment Account
Your Self Assessment account on the HMRC website allows you to manage every aspect of your tax affairs. From viewing past returns to updating personal information, this digital account is a vital tool for staying organised and compliant.
Through your account, you can:
- File or amend your tax return
- View tax calculations and payment history
- Make payments or set up direct debits
- Apply for payment plans
- Update your contact details or income sources
- Notify HMRC if you’re no longer self-employed
It’s important to check your account regularly for notifications, payment reminders, or updates from HMRC.
Updating Your Personal Details
Keeping your HMRC account up to date is essential. If you change your name, address, business type, or contact details, you should update this information promptly.
Failing to notify HMRC of changes may result in missed correspondence, delayed payments, or incorrect tax assessments.
You can update your details by logging into your Self Assessment account and navigating to the appropriate section. Some changes, such as altering business structure or ceasing self-employment, require completion of specific forms.
Stopping Self-Employment
If you stop trading as a sole trader or close your rental business, you must inform HMRC. This ensures your tax obligations are finalised correctly and that you are removed from future Self Assessment requirements.
To notify HMRC:
- Log into your online account
- Select the option to tell HMRC you’ve stopped trading
- Submit the form with the date you stopped self-employment
You’ll still need to complete a final Self Assessment return covering the final period of trading. HMRC will calculate any final tax owed or refund due. You should also cancel your Class 2 National Insurance contributions. If you restart a business later, you can reactivate your account using your existing credentials, rather than registering again.
What If You’re Still Earning Some Income?
Even if you stop full-time trading or letting property, you may still need to file a return if you earn income above the Self Assessment thresholds. For example, if you take on small freelance projects or earn dividends from investments, you must report this to HMRC.
You only stop needing to submit returns once your total untaxed income falls below the reporting thresholds, and HMRC agrees to remove you from Self Assessment. Always check with HMRC if you’re unsure whether you still need to file a return, especially in cases of reduced but not eliminated income.
Appealing a Penalty or Decision
If you receive a penalty or tax decision that you believe is unfair or incorrect, you have the right to appeal. Valid reasons for appeal include illness, system failures, or unexpected personal circumstances.
To appeal:
- Log into your Self Assessment account
- Locate the penalty or decision notice
- Submit your appeal, including an explanation and any supporting documents
HMRC will review your appeal and notify you of the outcome. In some cases, penalties may be waived or reduced if you had a valid excuse for late filing or payment. If your appeal is rejected, you can request a formal review or appeal to the independent tax tribunal.
Receiving Tax Refunds
If HMRC calculates that you’ve overpaid tax, you may be due a refund. This usually happens when tax deductions exceed your final liability, or when you make advance payments on account that exceed your actual income.
Refunds are typically processed automatically and paid into your nominated bank account. You can also request a refund manually through your Self Assessment account if one is due. Make sure your bank details are accurate and up to date to avoid delays.
Preparing for the Next Tax Year
After completing one tax return cycle, the next one begins. Preparing early can help reduce stress and ensure accuracy when it’s time to file again.
Tips for staying prepared:
- Keep detailed records throughout the year
- Set aside money regularly to cover tax payments
- Review your income and expenses each quarter
- Monitor payment deadlines in your calendar
- Consider using accounting tools or professional advice if your situation becomes more complex
Keeping good habits year-round will make the next tax season significantly easier.
Conclusion
Navigating the Self Assessment process is an essential responsibility for sole traders and landlords in the UK. While it may seem daunting at first, understanding the key steps—from registration through to filing and paying your tax bill—makes the process more manageable and ensures compliance with HMRC requirements.
Beginning with registration, it’s vital to determine whether you meet the criteria for Self Assessment. If you’re earning more than £1,000 from self-employment or property rental, or have other untaxed income or capital gains, registration is a must. Acting before the 5 October deadline following the end of the tax year is crucial to avoid delays or penalties.
Filing your Self Assessment return accurately and on time is the next critical step. It involves reporting all sources of taxable income, claiming any allowable expenses, and ensuring all necessary supplementary pages are included. For many sole traders and landlords, this includes income from freelance work, business partnerships, rental income, or overseas earnings. Record-keeping plays a central role here, and keeping accurate, detailed financial records throughout the year will simplify this stage.
Once your return is submitted, understanding and managing your tax payments comes next. You’ll need to pay Income Tax and possibly National Insurance Contributions, often in two installments known as payments on account. Meeting deadlines on 31 January and 31 July each year is key to avoiding penalties and interest. If cash flow is a concern, setting up a Budget Payment Plan or a Time to Pay arrangement can help you spread the cost.
It’s equally important to keep your HMRC account details up to date and to inform HMRC promptly if you stop trading or no longer need to complete a Self Assessment return. Filing a final return and wrapping up your obligations properly ensures a clean break and helps prevent future issues.
Although the Self Assessment system requires commitment, many individuals successfully manage it each year with the right knowledge and preparation. By staying organised, planning ahead, and making use of the digital tools provided by HMRC, sole traders and landlords can maintain control of their tax responsibilities and avoid unnecessary stress or penalties.
Remember, taking the time to understand how Self Assessment works is not just about compliance—it’s a fundamental part of managing your income, protecting your finances, and sustaining the long-term success of your business or property venture.