How Self Assessment Works for Sole Traders
Introduction
If you're new to self-employment — or simply completing your tax return for the first time — Self Assessment can feel confusing. The good news is that the process is far simpler than it looks once you understand the steps involved.
In this guide, we’ll walk you through everything you need to know as a UK sole trader: why Self Assessment exists, what forms you’ll complete, what information HMRC requires, and how digital submission works.
By the end, you’ll know exactly what to expect — and how tools like QTax make the process easier.
What Is Self Assessment?
Self Assessment is HMRC’s system for collecting Income Tax from people whose tax isn’t handled automatically through PAYE.
Why sole traders must submit a tax return
If you work for yourself, there's no employer calculating and paying tax on your behalf — so HMRC requires you to report:
- how much you earned
- what business expenses you incurred
- whether you have other income (e.g., rental, interest, foreign income)
HMRC then uses this information to calculate the tax and National Insurance you owe.
How HMRC calculates your tax
At a simple level: Taxable profit = Your income – Allowable business expenses
You then pay:
- Income Tax on profits above your personal allowance
- Class 2 National Insurance (if threshold met)
- Class 4 National Insurance (if threshold met)
Registering for Self Assessment
If you’ve never filed as a sole trader before, you must register with HMRC.
When you must register
You need to register if:
- you earned more than £1,000 from self-employment in a tax year
- or you expect to earn more than this going forward
How to register online
- Create a Government Gateway account.
- Complete the online registration for Self Assessment and sole trader status.
- HMRC will send you a Unique Taxpayer Reference (UTR) number.
- Use your UTR to file your first return.
Registration deadlines are covered in more detail in our Tax Deadlines for Sole Traders guide.
What You Need Before You Start
Gathering the right information early makes completing your tax return much easier.
You’ll need:
- Your UTR number
- Your Government Gateway login
- Total income from your business during the tax year
- Details of your business expenses
- Information about any other income, such as:
- PAYE employment
- savings interest
- property income
- dividends
You do not need to upload receipts to HMRC, but you must keep records in case of a future compliance check.
The Core Sections of a Sole Trader Tax Return
You’ll usually submit two main forms:
SA100 — Main Tax Return
This is the general form that covers:
- your personal details
- other income
- pension contributions
- student loan repayment
- charitable donations
SA103 — Self-Employment
This is the section specifically for sole traders.
There are two versions:
- SA103S (Short) — for simpler businesses
- SA103F (Full) — typically for higher turnover or more detailed accounts
Most sole traders will complete the short version.
Step-by-Step: Completing Your Tax Return
1. Enter your income
You’ll provide your total business income for the tax year.
If you had PAYE employment alongside self-employment, you’ll include that too.
2. Add your allowable business expenses
These reduce the amount of tax you pay and must follow HMRC’s “wholly and exclusively” rule.
Examples include tools, travel costs, phone bills, home office expenses and more.
(See our Allowable Expenses for Sole Traders guide for full details.)
3. Declare any additional income
If relevant, you’ll enter information about:
- bank interest
- dividends
- rental profits
- foreign income
4. Review your summary
HMRC will calculate:
- your Income Tax
- Class 2 and Class 4 National Insurance
- whether you need to make a payment on account
5. Submit your return
If you’re filing online, you can submit directly through compatible software like QTax.
Filing Deadlines and Penalties
Key dates
- 5 October — Deadline to register as self-employed
- 31 October — Deadline for paper returns
- 31 January — Deadline for online returns and tax payment
Late filing penalties
HMRC applies automatic penalties if you miss the deadline:
- £100 immediately
- additional penalties after 3, 6 and 12 months
Late payment penalties
Interest is charged daily until the tax is fully paid.
How QTax Helps
QTax makes the Self Assessment process simpler by:
- guiding you through each section step by step
- helping you understand allowable expenses
- providing smart prompts to reduce errors
- supporting fully digital, MTD-compatible HMRC submission
- keeping your submitted return stored securely for future access
You stay in control — QTax just removes the guesswork.
FAQs
Do I need an accountant to file Self Assessment?
No. Many sole traders file their own tax returns, especially with software designed to simplify the process.
What happens if I make a mistake?
If you spot an error after submitting, you can usually amend your return within 12 months.
Can I file Self Assessment early?
Yes — HMRC opens the system for early submission shortly after the end of the tax year.
Conclusion
Self Assessment can feel daunting at first, but once you understand the process, it’s simply a structured way of telling HMRC what you earned and what you spent.
With the right preparation — and tools designed for sole traders — filing your tax return becomes much more manageable.
Ready to file your Self Assessment the easy way?
Start your 30-day free trial with QTax.