How to Do a Self Assessment Tax Return — Step by Step Guide for Sole Traders

What Is Self Assessment?

Self Assessment is HMRC's system for collecting Income Tax and National Insurance from people whose tax is not automatically deducted by an employer. If you are self-employed, a sole trader, or a freelancer, you must complete a Self Assessment tax return every year.

Who Needs to File?

You must register for Self Assessment and file a tax return if:

• You are self-employed or run your own business
• You earned more than £1,000 from self-employment in the tax year
• You have rental income
• You have untaxed income above £2,500
• You are a company director

Key Deadlines

Missing the 31 January deadline results in an automatic £100 fine, even if you owe no tax.

Step-by-Step: How to Complete Your Tax Return

Step 1 — Register for Self Assessment

If this is your first year, register at gov.uk/register-for-self-assessment. HMRC will post you a Unique Taxpayer Reference (UTR) — keep this safe.

Step 2 — Gather Your Records

You will need:

• Total income from self-employment
• All business expenses (receipts, mileage log, subscriptions)
• Any other income (employment, rental, dividends, savings interest)
• P60 or P45 if you also work as an employee

Pivitax totals your income and expenses automatically in your dashboard — and generates a PDF tax report you can use when filing.

Step 3 — Log In to HMRC Online

Go to gov.uk/log-in-file-self-assessment-tax-return and log in with your Government Gateway account.

Step 4 — Fill In Your Return

The return asks for:

• Self-employment income — your total turnover for the year
• Allowable expenses — enter totals by category, or use the simplified cash basis
• Other income — employment, rental, dividends
• Personal details — National Insurance number, address, UTR

Step 5 — Calculate Your Tax

HMRC calculates automatically once you enter your figures. You pay:

• Income Tax — 20% on profits between £12,571 and £50,270 (basic rate)
• Class 4 National Insurance — 9% on profits between £12,570 and £50,270
• Class 2 National Insurance — £3.45 per week if profits exceed £12,570

Step 6 — Pay Your Tax Bill

Payment is due by 31 January. You can pay by:

• Online banking (bank transfer to HMRC)
• Debit card on gov.uk
• Direct debit

If your tax bill was over £1,000, HMRC may ask you to make Payments on Account — advance payments towards next year's bill.

What Happens If You Are Late?

• 1 day late: automatic £100 penalty
• 3 months late: £10 per day (up to 90 days)
• 6 months late: 5% of the tax owed or £300 (whichever is higher)
• 12 months late: further 5% or £300

Tips to Make It Easier

• Track expenses throughout the year, not just in January
• Upload receipts as you receive them
• Keep a mileage log for every business journey
• Set aside 25–30% of each payment you receive for tax

Pivitax does the hard work throughout the year — scanning receipts, tracking mileage, and organising your expenses by category. When January comes, you open your tax report and the numbers are already there.