Self-Assessment tax returns: a guide for sole traders

The deadline for your online Income Tax Self-Assessment (ITSA) is 31 January 2024.

If you are submitting a paper return the deadline is 31 October 2023.  

As we get closer to the date, you must have a firm grasp of the ITSA process to guarantee your business is not affected by setbacks or fines.  

Below is a guide to help you ensure a smooth and hassle-free tax return experience this tax season. 

Understanding your tax obligations 

As a sole trader, you are personally responsible for reporting your business income and expenses to HM Revenue & Customs (HMRC) through a Self-Assessment tax return. This involves: 

  • Individual responsibility: Sole traders report their business income and expenses on their individual tax returns. 
  • Simplicity: Generally, the process is more straightforward compared to the reporting requirements for other business structures. 
  • National Insurance Contributions (NICs): Sole traders are required to pay Class 2 and Class 4 NICs based on their profits. 
  • Payment on account: Sole traders may be required to make payments on account, which are advance payments towards your tax bill. 

Getting to grips with ITSA 

The Self-Assessment process involves providing HMRC with a detailed report of your earnings and expenses over the tax year.  

This is a meticulous process, and it is advisable to maintain a well-organised record of all your financial transactions to facilitate a smooth self-assessment. 

One of the perks of being a sole trader is the ability to deduct allowable expenses from your income, reducing your tax bill.  

Allowable expenses can include costs such as office rent, utility bills, and travel costs incurred exclusively for business purposes.  

It is wise to consult with a professional tax adviser to ensure you are maximising your allowable deductions whilst remaining compliant with the law. 

Making Tax Digital for Income Tax (MTD for ITSA) 

The UK Government has introduced the Making Tax Digital for Income Tax initiative to streamline the tax reporting process, making it easier and more efficient for sole traders to declare their incomes. 

Starting from April 2026, sole traders with a business income above £10,000 per annum will be required to report their income and expenses digitally every quarter.  

This initiative aims to provide a more real-time approach to tax management, helping you to keep on top of your tax affairs.  

It is advisable to familiarise yourself with digital record-keeping systems and software that are compatible with MTD for ITSA or discuss this development with your accountant to ensure a seamless transition. 

Submission deadlines  

We recommend starting the Self-Assessment process early to avoid a last-minute rush and potential penalties for late submission. 

  • Paper Self-Assessment tax returns: 31 October 2023 
  • Online Self-Assessment tax returns: 31 January 2024 
  • Deadline for paying tax owed: 31 January 2024 

There are several rare exceptions to these deadlines, and you should always consult your accountant if you think they might apply to your business.  

Other types of small businesses 

While this blog focuses on sole traders, it is worth noting that there are other forms of small businesses, such as partnerships and limited companies, each with its own set of tax obligations and allowances.  

We will be posting several blogs in the coming weeks outlining the different responsibilities that each business structure is obligated to fulfil in its Self-Assessment.  

Seek expert advice 

Navigating the ITSA process can be a formidable task, especially for sole traders who are new to the process.  

However, understanding and efficiently managing your Self-Assessment tax return r can pave the way for a successful and compliant business journey.  

Remember, the key to a stress-free tax season is preparation and seeking the right advice.  

Our team of experts is here to assist you, offering tailored advice to help you navigate the tax landscape with confidence. 

To find out how our experts could streamline your Self-Assessment this tax season, get in touch.  


Awards and Accreditations

Get in touch

Get in touch

If you would like to see full details of our data practices please visit our Privacy Policy and if you have any questions please email