A Sole Trader’s Guide To Completing And Filing A Tax Return

If you’re self-employed individual who owns your own business, you’ll need to submit what’s known as a Self Assessment tax return. This is so you can then pay the right amount of Income Tax and National Insurance.

Filing your taxes for the first time may seem like a daunting task. But in reality, it doesn’t have to be. GoSimpleTax is here to help you understand how to complete your Self Assessment tax return as a sole trader, so you can spend more time focusing on your business and less time worrying about tax.

Ready? Grab a cup of tea, and let’s get started…

REGISTER FOR SELF ASSESSMENT

If you haven’t yet registered with HMRC, you’ll need to set up as a sole trader. You’ll only have to do this if any of the following points apply to you:

• You earn more than £1,000 from self-employment in the tax year
• You want to qualify for benefits by making voluntary Class 2 National Insurance payments
• You require proof that you are self-employed

You then need to notify HMRC that you should pay tax through Self Assessment. Luckily, registering is simple: you can choose to either do it online or fill out an on-screen form, print it out, and post it.

As soon as you register for Self Assessment, you’ll automatically be given a 10-digit code that uniquely identifies you. This is known as a Unique Taxpayer Reference (UTR) number. You’ll need to use this when filling out your tax return, so we recommend keeping it within reach for the next steps.

Bear in mind that you must register for Self Assessment before the 5th October in your business’ second tax year. So, if you became a self-employed worker between 6th April 2021 and 5th April 2022 (i.e. the 2021/22 tax year), your deadline to register is 5th October 2022.

COMPLETE AND SUBMIT YOUR SELF ASSESSMENT TAX RETURN

Once you’ve gathered the appropriate information, it’s time to complete and submit your tax return. Deep breath – it’s not as scary as it sounds!

If you prefer to do things in a more traditional way, you can download and fill in the SA100 tax return form, print it out and post it to HMRC. The deadline for filing a paper tax return is 31st October.

You can also choose to do things the modern way and submit your Self Assessment tax return online (this is our favourite method, for reasons that’ll become clear…). To submit an online tax return, you can either use HMRC’s online services or Self Assessment tax return software like GoSimpleTax.

As a self-employed person, you’ll initially fill in two forms: the SA100 (main tax return) and either SA103S (the form for self-employment if your annual turnover was below the VAT threshold for the given tax year) or SA103F (the form for self-employment if your annual turnover was above the VAT threshold).

However, you may also need to fill in some supplementary forms, depending on any other types of income you may have – these include employment income (SA102), UK property income (SA105), foreign income (SA106), trust income (SA107) and capital gains income (SA108).

While the form or forms may appear intimidating at first, you’ll only have to fill out the sections that apply to you. HMRC’s ‘How to fill in your tax return’ guidance notes can help here.

The great thing about our software is that it automatically fills in the sections in the form that are relevant to you based on the information you provide. It even lets you know if it thinks you’ve made any mistakes or if you’re potentially entitled to any tax reductions. How convenient is that?

Now that you’ve submitted your tax return, the amount of tax you owe will be automatically calculated. For help on filing your tax return, you can either choose to contact HMRC or seek guidance from our expert team here at GoSimpleTax.

DEADLINES AND PENALTIES FOR LATE SUBMISSIONS

As with every self-employed individual, the deadline for online tax returns is midnight on the 31st January following the end of the tax year. This just so happens to also be the deadline for paying any tax you owe and your first payment on account (advance payment towards your bill for the next tax year).

The deadline for paper tax returns is midnight on the 31st October (meaning you get an extra three months if you do it online). There’s typically a second payment on account deadline on the 31st July too.

Failure to send your Self Assessment tax return or pay your tax bill on time can result in a penalty, so it pays to be organised.

CLAIM YOUR ALLOWABLE EXPENSES

Of course, penalties are something that you should avoid at all costs. In fact, we’re betting you probably want to save money wherever you can. As luck would have it, you can claim several business expenses as a sole trader.

Among the most common expenses that sole traders claim are:

• Stock and raw materials
• Professional fees (such as lawyers and accountants)
• Home office expenses (like working from home allowance and stationery)
• Motor expenses

These costs, as long as they were incurred solely for business purposes, can be deducted from your total taxable income – meaning you could end up with a smaller tax bill.

RECORD-KEEPING

Aside from filing Self Assessment tax returns and paying Income Tax on your profits, one of your main responsibilities as a sole trader is bookkeeping. This is essentially a record of your business’ day-to-day transactions, including bank statements and receipts. It’s a good idea to keep these in the event that HMRC launches an investigation against you. This way, you’ll have all of the relevant evidence that they require.

If this is your first time filing taxes or you simply want to make things simpler for yourself, turn to GoSimpleTax. We can help you complete the Self Assessment tax return form by storing your income and expenditure information throughout the tax year before adding this to the tax return itself.

The best part about our service? We offer a freemium version to use until you want to submit your tax return to HMRC or add more than five entries per calendar month. Learn more about our software here.

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.