Filing your self-employed tax return step by step

Running your own business as a self-employed person in the United Kingdom brings many benefits, but also obligations - one of them is filing your tax return. The process can seem complicated, especially for those who are just starting out with self-employment, so it is worth learning more about what the Self Assessment process looks like for the self-employed. In the article below we will go step by step through how to prepare for your self-employed tax return in the UK, what the key deadlines are and when you can expect a tax refund.

When do you have to file a tax return as a self-employed person?

First of all, it is worth stressing that not everyone has to file a tax return. There are specific income thresholds that trigger the obligation to file a Self Assessment - this happens, among other cases, when in a given tax year:

• your income from self-employment exceeds £1,000 (before deducting any reliefs you are entitled to),

• you earn rental income from property exceeding £2,500 (for lettings under The Rent a Room Scheme the income threshold is higher - paying tax and filing a tax return is required once you exceed £7,500),

• you receive untaxed income of more than £2,500, e.g. from tips,

• your income from investments or savings exceeds £10,000,

• you, or your partner, earn over £50,000 and claim Child Benefit,

• your taxable income exceeds £100,000,

• you receive income from abroad.

It is also worth remembering that if you run a business as a self-employed person, when filing your tax return you must include information about all sources of income - for example, people who also work in employment must include in their return the earnings from that employment, even though they have already been taxed by the employer.

How to file as self-employed in the UK?

Once you know that you are required to file a Self Assessment, you have two options ahead of you. You can of course decide to complete your Self Assessment in the UK on your own - this, however, requires setting aside time to complete the necessary formalities and knowing the current rules. The most convenient option, and the one preferred by most business owners, is to hire a professional firm to take care of all the formalities. These are exactly the services we offer at PolAccount. The many years of accounting experience our staff have mean we can ensure your business’s tax return is filed on time and in line with the applicable rules, so that you don’t have to worry about a thing. If you want experts to take care of your taxes, get in touch with us!

The Self Assessment process itself for the self-employed in the United Kingdom looks like this:

• If you have not filed a Self Assessment before, you first need to register in the system. You can do this online or by post.

If you are registering for Self Assessment online: Create a business tax account on the HMRC (HM Revenue & Customs) website. After logging in, add Self Assessment and Class 2 National Insurance contributions to it.

• If you are registering for Self Assessment offline: Fill in form CWF1 to register for Self Assessment and as a payer of Class 2 National Insurance contributions, then send it to HMRC’s address.

• To file online you will need a reference number (UTR - Unique Taxpayer Reference), which you will receive in a registration letter from HMRC within 15 working days of registering (if you apply from abroad, you may wait longer for your UTR - up to 21 working days). You can get your UTR number sooner if you use the HMRC app.

• Complete your tax return - remember to prepare in advance the necessary information about your income, as well as expenses that can be deducted from tax. If you make a mistake, you can correct the details within 12 months of the final Self Assessment deadline - online or on paper.

• Based on the information given in your return, HMRC will calculate the Income Tax due, which you must pay by 31 January.

How to calculate self-employed tax?

When calculating Income Tax, you need to include all income from the given tax year - for this you will need to keep accurate records, which will allow you to complete your tax return quickly and without problems. It is also worth remembering that you can deduct the costs of running your business, which lets you reduce what you owe HMRC - all expenses must also be properly documented.

Another important issue is the tax bands, which set the amount of Income Tax for particular earnings brackets. In the 2024/25 tax year they are:

• Personal Allowance (tax-free amount): up to £12,570

• Basic rate (20%): from £12,571 to £50,270

• Higher rate (40%): from £50,271 to £125,140

• Additional rate (45%): from £125,140

When to file your Self Assessment? Key dates

The tax year in the United Kingdom runs from 6 April to 5 April of the following calendar year. If you are filing a Self Assessment for the 2024/25 tax year, you must remember to:

• register with HMRC by 5 October 2025, if you are filing a Self Assessment for the first time,

• file your return with HMRC by 31 October 2025 - if you are filing on paper,

• file your return with HMRC by 31 January 2026 - if you are filing electronically,

• pay the tax due by 31 January 2026.

What are the penalties for a late or missing Self Assessment?

If you are required to file taxes through the Self Assessment system, it is very important to keep to the deadlines given above. Filing your tax return late can result in a financial penalty - £100 if the delay is less than three months. Longer delays, as well as late payment of the tax due, can lead to further penalties.

Avoiding the penalty is only possible if there is a reasonable excuse, e.g. a documented death in the family, an unexpected hospital stay or a deterioration in health.

What documents do you need to file a self-employed tax return in the UK?

It is worth preparing in advance all the documents and information needed to complete your tax return, so the whole process goes smoothly. To file your Self Assessment you will need:

• your UTR and National Insurance number,

• detailed information about your earnings from self-employment (if you also worked in employment in the given tax year, you will also need a P45 or P60 form),

• documented expenses related to the costs of running your business,

• proof of donations to charities and other causes entitling you to tax reliefs,

• information about any taxable benefits received during the given tax year, e.g. Jobseeker’s Allowance.

What costs can be deducted from taxable income under self-employment?

Only expenses related to running the business can be deducted from tax; these can include, among others, the costs of: maintaining an office, business travel, workwear, employing staff, buying materials or advertising. If in doubt about a specific expense, you can get help from HMRC or by using the services of an accountancy practice.

How to get a refund of overpaid tax as a self-employed person in the UK?

If you have paid too much tax (e.g. because of a mistake in your tax return), you can apply to HMRC for a tax refund. You can do this online using your Self Assessment account. Importantly, however, the timing of your application affects whether you get a refund - if you have another tax payment due within 45 days of your request, the refund amount may be set off against that liability instead of being paid out.

If, as a self-employed person, you work as a subcontractor and your work is covered by the Construction Industry Scheme (CIS), the contractor deducts an amount for tax from your earnings, which they pass on to HMRC. You will receive confirmation of these deductions from the contractor in the Annual CIS Statement for the given tax year, on the basis of which you will file your tax return. You can claim a refund of the tax deductions using form CIS 40 (if you are claiming during the tax year) or your tax return (if you are claiming after the end of the tax year).

Need help with your self-employed tax return in the UK?

If you don’t feel up to tackling this task on your own, or simply prefer to focus your attention on other aspects of your business, working with an accountancy practice is the best solution. The specialists at PolAccount have many years of experience and no aspect of the British tax system holds any secrets for them. We offer comprehensive services tailored to the needs of your business, giving you the certainty that all your obligations to the tax office will be met correctly and on time. We encourage you to get in touch!