How to do Self-assessment as a Sole Trader — Cuppa

It's 10:47pm on 31 January. You've got a cold cup of tea next to your laptop, a browser tab open on HMRC's website, and absolutely no idea where that receipt from June went.

Sound familiar? You're not alone. Millions of UK sole traders scramble to complete their self-assessment at the last minute every year, not because they're disorganised, but because nobody ever explained the process in plain English.

This guide does exactly that. By the end, you'll know what self-assessment is, whether you need to do it, what information you'll need, how to complete it step by step, and what's changing from April 2026 with Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). No jargon. No overwhelm. Just a clear walkthrough you can actually follow.

Already a Cuppa user? Your income and expenses are tracked and ready, log in to your dashboard to pick up where you left off.

What is self-assessment?

Self-assessment is the system His Majesty's Revenue and Customs (HMRC) uses to collect Income Tax and National Insurance Contributions (NIC) from people whose tax isn't automatically deducted at source.

When you're employed, your employer handles tax through PAYE (Pay As You Earn), it comes out of your wages before you see it. But when you're a sole trader, there's no employer to do that. You earn money, you keep records, and then once a year you tell HMRC how much you earned and pay the tax you owe. That annual process is self-assessment.

It's not as complicated as it sounds. Think of it like settling a tab at the end of a night out. Throughout the year you keep a rough track of what's going on. Then at the end, you tally it all up, hand over what you owe, and you're done for another year.

What does a self-assessment tax return actually include?

Your self-assessment return is made up of forms. The main one is the SA100. If you're self-employed, you'll also complete either:

SA103S (short version), for simpler businesses with turnover under £85,000
SA103F (full version), for more complex businesses or turnover above £85,000

You'll report your total income (from all sources, not just self-employment), your allowable expenses, and the profit on which you'll be taxed. HMRC works out your tax bill from there.

Do you need to complete a self-assessment tax return?

Not every sole trader needs to complete a self-assessment return, but most do. You need to register for self-assessment if any of the following apply:

You earned more than £1,000 from self-employment in a tax year (this is called the trading allowance)
You're a partner in a business partnership
You have other income that hasn't been taxed, rental income, foreign income, or income from savings and investments above certain thresholds
You're a company director (in some cases)
You owe Capital Gains Tax

If you're self-employed and earning anything meaningful, you almost certainly need to be in self-assessment.

What if I'm new to self-employment?

You need to register with HMRC as soon as you start trading, or by 5 October after the end of the tax year in which you started. So if you went self-employed in the 2025/26 tax year (which runs from 6 April 2025 to 5 April 2026), you need to register by 5 October 2026.

Registering is straightforward. You do it through GOV. UK, and HMRC will send you a Unique Taxpayer Reference (UTR) number by post. You'll need that UTR to complete your return.

Good to know: Missing the 5 October registration deadline can lead to a late registration penalty. If you think you should have registered already, do it now rather than waiting.

What you'll need before you start

Gathering everything in one place before you start makes the whole process much faster. Here's what you need:

Your identity and account details:

UTR (Unique Taxpayer Reference), 10-digit number, on any letter from HMRC
National Insurance number, on your payslips or any HMRC letter
Government Gateway user ID and password (or set one up at GOV. UK)

Your income records:

Total income from self-employment (your turnover, everything you earned, before expenses)
Income from any other sources: employment (your P60 or P45), rental income, dividends, savings interest
If you received any grants, such as SEISS (Self-Employment Income Support Scheme) payments, these are taxable income

Your expense records:

A breakdown of your allowable business expenses
If you claim home office costs: the number of hours worked from home, or your actual costs with a business-use calculation
If you claim mileage: total business miles driven

Bank details:

If HMRC owes you a refund, they'll need your sort code and account number to pay it back

Take a few minutes to gather these before you start. You'll thank yourself later.

Tip: If you use Cuppa, your income and expenses are already tracked and categorised. Your quarterly update summaries give you exactly what you need for each section of your self-assessment return.

How to complete your self-assessment tax return, step by step

Here's the full process from start to finish.

Step 1: Register for self-assessment (if you haven't already)

Go to GOV. UK and register for self-assessment. HMRC will send your UTR by post within about 10 working days. If you already have a UTR from a previous year, skip this step.

Step 2: Set up your Government Gateway account

You'll need a Government Gateway user ID to access HMRC's online filing system. If you haven't got one, create one at the HMRC sign-in page. You'll verify your identity using your National Insurance number and personal details.

Step 3: Gather your numbers

This is where record-keeping pays off. You need:

Total turnover: every penny you earned from self-employment in the tax year (6 April to 5 April)
Total allowable expenses: all the legitimate business costs you're claiming (see the section below)
Net profit: turnover minus expenses, this is what you pay tax on
Any other income from the tax year

If your records are in a spreadsheet, now's the time to total them up. If you use Cuppa, your income and expenses dashboard does this for you automatically.

Step 4: Complete the SA100 main return

Personal details: name, address, National Insurance number, UTR
Tailor your return: tick the boxes for the income types that apply to you (self-employment, employment, rental income, etc.)
Income sections: complete each section relevant to you

Step 5: Complete your self-employment pages (SA103S or SA103F)

This is the core section for sole traders. You'll enter:

Your business name and description
Your accounting period (usually 6 April to 5 April for the tax year)
Turnover, total income before expenses
Allowable expenses, broken down by category (office costs, travel, stock, marketing, etc.)
Net profit, calculated automatically once you enter the above

If your expenses are under a certain threshold, you may be able to use the simplified expenses method for some costs (like home office and mileage). HMRC's guidance covers when this applies.

Step 6: Review and check

Before you submit, HMRC's system calculates your tax bill automatically. Review the summary carefully:

Does the profit figure look right?
Have you included all your income sources?
Have you claimed everything you're entitled to?
Does the tax calculation match what you were expecting?

If something looks off, go back and check your figures. A simple input error can create a significant difference in your tax bill.

Step 7: Submit and pay

Once you're satisfied everything is correct, submit your return. HMRC will confirm receipt and show your tax calculation.

You'll then need to pay any tax owed by 31 January. You can pay by:

Bank transfer (Faster Payments)
Debit or corporate credit card
Direct Debit (set up in advance through your HMRC account)
In person at a bank (you'll need a payslip from HMRC)

The deadlines you can't miss

The self-assessment deadline for online filing is 31 January each year. Miss it and you'll face automatic penalties, even if you don't owe any tax. Here are all the key dates:

Deadline	What it's for
5 October	Register for self-assessment (if you're new to it)
31 October	Paper return submission deadline (if filing on paper)
31 January	Online return submission AND payment of tax owed
31 July	Payment on account (second instalment)

What are payments on account?

If your tax bill is above £1,000, HMRC requires you to make advance payments towards next year's bill. These are called payments on account, and they catch a lot of sole traders off guard.

You'll pay:

50% of your current year's tax bill on 31 January (alongside settling the previous year's bill)
Another 50% on 31 July

So in your first year of a larger tax bill, you could owe up to 150% of what you were expecting on 31 January. Planning for this is crucial. Cuppa's live tax estimate updates throughout the year so you can see your estimated bill at any point, no nasty surprises come January.

For a full breakdown of MTD quarterly deadlines alongside the annual self-assessment calendar, see our MTD ITSA deadlines guide for sole traders.

What expenses can you claim?

Your allowable expenses reduce your profit, which reduces your tax bill. Most legitimate business costs can be claimed, things like office supplies, software subscriptions, travel for business, professional fees, and a proportion of your home costs if you work from home.

The golden rule from HMRC: the expense must be "wholly and exclusively" for business purposes.

For a full breakdown of what you can and can't claim, read our complete guide to sole trader allowable expenses. It covers everything from mileage to mobile phones, with plain-English explanations throughout.

Common mistakes sole traders make on self-assessment

Even people who've been doing self-assessment for years make these errors. Here's what to watch out for.

Forgetting non-employment income

Your self-assessment covers all your income, not just from self-employment. Bank interest, rental income, dividends: it all goes in. Leaving out a source of income (even accidentally) can result in penalties and interest on unpaid tax.

Confusing turnover with profit

You pay tax on your profit, what's left after your expenses. Not on your total income. This seems obvious but it trips people up, particularly in the first year.

Priya, a freelance copywriter from Bristol, was terrified when she realised her self-assessment was due for the first time. She'd set aside 20% of everything she earned, expecting that to cover her tax. When she actually worked through her expenses, software, her home office portion, travel to client meetings, her profit was significantly lower than her turnover. Her actual tax bill was a fraction of what she'd feared. "I'd been over-saving for tax the whole year," she said. "Which was annoying but definitely a better problem to have."

The lesson: track your expenses properly throughout the year and you'll always know where you stand.

Missing the registration deadline

If you started trading and didn't register by 5 October following your first tax year, you may already be late. HMRC does issue penalties for this, though they're more lenient with first-time mistakes if you come forward proactively. Register as soon as possible if you think you're behind.

Not saving for tax as you go

Unlike employed people, sole traders don't have tax deducted before they're paid. It's easy to spend what lands in your account and then face a shock in January. The standard advice: set aside 25-30% of every payment you receive into a separate savings account. It's your tax pot, not yours to spend.

Cuppa's live tax estimate helps with this, you can see your estimated bill update in real time as you log income and expenses, so you always know roughly what you'll owe.

Rushing through without checking the figures

Self-assessment systems do most of the calculations for you, but they can only work with the numbers you give them. A misplaced digit, a duplicated entry, or a missed expense category can skew your tax bill significantly. Always review the summary before you submit.

How MTD for ITSA changes self-assessment from April 2026

This is the big change worth understanding, especially if you're a sole trader with a higher income.

From 6 April 2026, sole traders earning over £50,000 a year from self-employment (gross, before expenses) must comply with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). From April 2027, this threshold drops to £30,000.

What changes under MTD?

Instead of one annual self-assessment return, you'll:

Keep digital records throughout the year (in MTD-compatible software)
Submit quarterly updates to HMRC, four times a year, summarising your income and expenses for each quarter
Submit a final declaration at the end of the tax year (replacing the traditional self-assessment return)

The quarterly updates aren't additional tax payments. They're just digital summaries of what you've earned and spent in each three-month period. Think of them as four small admin tasks spread across the year, rather than one big scramble in January.

Does self-assessment go away completely?

Not entirely. You'll still submit a final declaration at the end of the year (by 31 January), and you'll still pay your tax on the usual deadlines. But the heavy lifting, compiling your income and expenses, happens gradually throughout the year via quarterly updates, rather than all at once.

For most sole traders who switch to MTD-compatible software now, January will feel very different. Because you've been recording everything as you go, the final declaration is mostly just a review and confirmation.

Do I need to do anything differently right now?

If you're above the £50,000 threshold:

Start using MTD-compatible software if you haven't already (Cuppa is built specifically for this)
Make sure your records are digital from the start of the new tax year (6 April 2026)
Your first quarterly update covers April to July 2026, with a deadline of 7 August 2026 — see our first MTD quarterly update walkthrough for a step-by-step guide

If you're below the £50,000 threshold:

You don't need to switch to MTD yet, but the £30,000 threshold arrives in April 2027
Starting to track income and expenses digitally now means the transition will be effortless when your time comes

For the full picture of what MTD for ITSA requires, read our Making Tax Digital for sole traders guide.

Self-assessment doesn't have to be a January panic

Tom is a plumber based in Leeds. For the first five years of his self-employment, self-assessment was something he dreaded every January. He'd spend a weekend trawling through bank statements, trying to work out which purchases were business, which were personal, and how much fuel he'd used for job visits versus personal driving.

Then he switched to tracking everything in Cuppa as he went. Each week, usually while he was having his morning tea, he'd log what he'd earned and any costs he'd incurred. By the time January came around, everything was already there. The numbers were done. He submitted his self-assessment in under an hour.

"It's honestly not that different to checking your bank app," he said. "I just got into the habit of logging things when they happened instead of trying to remember them later."

That's the mindset shift that makes self-assessment genuinely easy: treat it as a year-round habit, not an annual event.

The short version

Here's what you need to know:

Self-assessment is how sole traders report their income and pay tax to HMRC, once a year, with a 31 January deadline
Register by 5 October after your first year of trading, and get your UTR
Gather your income, expenses, and other income before you start, Cuppa tracks all of this automatically
Submit your return online through HMRC's Government Gateway by 31 January
Pay your tax bill by 31 January, and plan for payments on account if your bill is above £1,000
From April 2026, sole traders earning £50,000+ switch to MTD for ITSA, quarterly updates replace the annual scramble

The best thing you can do for next January's self-assessment is start now. Keep your records up to date throughout the year, track your income and expenses as they happen, and the whole process becomes a formality rather than a stress.

Get started with Cuppa free, no credit card required, set up in under two minutes. Your income and expenses tracked, your live tax estimate always visible, and your quarterly updates ready to submit with a click.

Frequently asked questions

When is the self-assessment deadline?

The online self-assessment deadline is 31 January each year. This is also the deadline to pay any tax owed. The paper return deadline is 31 October. Missing the online deadline results in an automatic £100 penalty, even if you don't owe any tax.

How do I register for self-assessment?

Register through GOV. UK. You'll need your National Insurance number. HMRC sends your UTR by post within 10 working days. You must register by 5 October after the end of your first tax year of self-employment.

What happens if I file my self-assessment late?

An automatic £100 penalty applies if you miss the 31 January deadline. Penalties increase the longer you leave it: £10 per day after three months (up to a maximum of £900), then further penalties at six and twelve months. Interest also applies to any unpaid tax.

Can I do my self-assessment myself without an accountant?

Yes, and most sole traders do. HMRC's online system does the calculations for you. You just need to enter accurate figures for your income and expenses. With good record-keeping throughout the year (and software like Cuppa to track it all), self-assessment is very manageable without professional help.

What's the difference between self-assessment and MTD for ITSA?

Traditional self-assessment involves one annual tax return submitted by 31 January. MTD for Income Tax Self Assessment (ITSA) replaces this with quarterly digital updates submitted throughout the year, followed by a final declaration. MTD applies to sole traders earning over £50,000 from April 2026, and over £30,000 from April 2027.

For more on how Cuppa tracks your income and expenses and submits your quarterly updates directly to HMRC, see everything Cuppa offers.

Back to all posts