More than 12 million people in the UK file a Self Assessment tax return each year, including a significant number of small business owners. Whether you're a sole trader, partner, or company director, understanding the Self Assessment process is essential to ensure you meet HMRC requirements and avoid penalties.
| Key Self Assessment Figures 2026/26 | Amount (£) |
|---|---|
| Personal Allowance | 12,570 |
| Basic Rate Threshold (20%) | 37,700 |
| Higher Rate Threshold (40%) | 125,140 |
| Class 2 National Insurance | £3.45 per week |
| Class 4 National Insurance | 9% on profits between £13,825 and £50,270 |
| Late Filing Penalty | £100 immediate fine |
Who Needs to File a Self Assessment Tax Return?
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Use Free Tax Calculator →Self Assessment is HMRC’s system for collecting Income Tax. Most employees pay tax through PAYE, but if you have income that isn’t taxed at source, such as self-employment profits or rental income, you’ll likely need to complete a tax return.
Business owners who must file a Self Assessment tax return include:
- Sole traders with business profits over £1,000 in the tax year
- Partners in a business partnership
- Company directors (unless your only income is taxed through PAYE)
- Individuals with income from property, investments, or foreign income
- Those who have received certain taxable state benefits or capital gains
HMRC automatically sends a notice to file a tax return if you have been registered, but if you think you need to file and haven’t received a notice, contact HMRC immediately to avoid penalties.
Registering for Self Assessment
If you are filing a return for the first time, you must register with HMRC. The deadline for registration is 5 October following the end of the tax year in which you started self-employment or had other taxable income.
There are two main registration routes:
- Sole traders and partnerships: Register for Self Assessment and Class 2 National Insurance contributions via the HMRC website.
- Company directors: Register as an individual for Self Assessment using your Unique Taxpayer Reference (UTR) number.
Once registered, HMRC will send you a UTR number by post, which you need to file your tax return online.
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Key Deadlines and Filing Methods
The UK tax year runs from 6 April to 5 April the following year. For the 2025/26 tax year, the relevant Self Assessment deadlines are:
- 5 October 2026: Register for Self Assessment if filing for the first time
- 31 October 2025: Paper tax return deadline
- 31 January 2026: Online tax return deadline and payment deadline
- 31 July 2026: Second payment on account due (if applicable)
Most business owners file online, which allows for quicker processing and automatic calculation of tax owed. To file online, you’ll need to create a Government Gateway account and log in to HMRC’s Self Assessment portal.
Filing late or missing payments can result in penalties and interest charges, so it’s vital to keep these deadlines in mind.
What to Include in Your Tax Return
Your Self Assessment tax return will cover all your taxable income and gains for the tax year, along with any allowable expenses or reliefs.
Income to declare
- Profits from self-employment or partnerships
- Dividends from shares and other investments
- Employment income not taxed at source (e.g., secondary jobs)
- Rental income from property
- Foreign income and gains
- Capital gains from selling assets like property or shares
Allowable expenses and reliefs
Small business owners can deduct legitimate business expenses from their income to reduce taxable profits. Common allowable expenses include:
- Office costs such as stationery and phone bills
- Travel expenses related to business
- Business premises costs (rent, utilities)
- Stock and raw materials
- Professional fees and insurance
It’s important to keep thorough records and receipts to back up your claims if HMRC requests evidence.
Common Mistakes to Avoid
Filing your Self Assessment accurately is crucial to avoid fines and unwanted HMRC enquiries. Some common pitfalls include:
- Missing the registration deadline: Register by 5 October after the end of the tax year in which you started trading.
- Late filing: Submitting your return or payment after 31 January leads to automatic penalties.
- Incorrect or incomplete income declaration: Ensure you declare all income streams, including foreign and investment income.
- Claiming non-allowable expenses: Only claim expenses that are wholly and exclusively for business use.
- Poor record keeping: Keep digital or physical copies of all relevant documents for at least 5 years after the filing deadline.
By avoiding these errors, you can ensure your tax return is processed smoothly and reduce the risk of HMRC enquiries.
- Register for Self Assessment with HMRC by 5 October after starting self-employment or receiving untaxed income.
- File your return online by 31 January to avoid penalties and pay any tax owed on time.
- Include all taxable income and allowable expenses accurately in your return.
- Keep detailed records and receipts for at least 5 years.
- Consider professional advice if your tax affairs are complex or if you’re unsure about your return.
Additional Resources
For further guidance, visit HMRC’s official Self Assessment pages on GOV.UK. If you want to explore business structures and tax implications, check our related article on Sole Trader vs Limited Company. For corporation tax information relevant to limited companies, see our Corporation Tax Guide.
Who must register for Self Assessment?
You must register if you are self-employed, a partner in a business partnership, a company director, or have other untaxed income such as rental or investment income. Registration must be done by 5 October following the end of the tax year you started trading or received income.
What happens if I file my tax return late?
Filing late results in an automatic £100 penalty, even if you owe no tax. Additional daily penalties and interest on unpaid tax can also apply if the delay continues beyond three months and six months.
Can I file a paper tax return instead of online?
Yes, but the deadline for paper returns is earlier—31 October following the end of the tax year. Filing online is generally quicker, more convenient, and allows for later submission until 31 January.
Official Sources
* GOV.UK: Set up a business · * HMRC: Income Tax rates · * HMRC: Corporation Tax · * HMRC: VAT registration