Self Assessment Tax Return Guide for Tradespeople

You must file a Self Assessment tax return if you are self-employed as a sole trader and earned more than 1,000 pounds in a tax year from your trade. This applies to virtually every working tradesperson in the UK, whether you are a full-time plumber, a weekend electrician, or a builder doing a handful of jobs on the side. The 1,000 pound threshold is your gross income before expenses, not your profit.\n\nEven if your self-employment income falls below 1,000 pounds, you may still need to file if your total taxable income from all sources exceeds 150,000 pounds, if you need to pay the High Income Child Benefit Charge, or if you have other untaxed income such as rental income or investment gains. HMRC may also send you a notice to file a return, and once received you must comply regardless of your income level.\n\nIf you are newly self-employed, you must register with HMRC by 5 October following the end of the tax year in which you started trading. For example, if you took your first self-employed job in August 2025, you need to register by 5 October 2026. Failing to register on time can result in penalties and means you may miss your filing deadline.\n\nIt is a common misconception among tradespeople that if you already pay tax through PAYE on an employed job, you do not need to file a return for self-employed work on the side. This is incorrect. Self-employment income must always be declared through Self Assessment, even if you already have an employer deducting tax from your wages.

Before you begin filling in your Self Assessment return, gather all the documents and records you will need. For a tradesperson, this typically includes a summary of all invoices issued during the tax year, bank statements showing income received and business expenses paid, receipts for all business costs, details of any vehicles used for business, records of mileage driven for work, CIS payment and deduction statements if you work in construction, and your Unique Taxpayer Reference (UTR) number.\n\nYour UTR is a ten-digit number that HMRC assigns when you register for Self Assessment. It appears on all correspondence from HMRC about your tax return. If you cannot find it, you can recover it through your Personal Tax Account online or by calling the Self Assessment helpline. You will also need your National Insurance number and your Government Gateway login credentials to file online.\n\nIf you use TradeTally throughout the year, most of this information is already organised for you. Your invoice totals, expense categories, mileage records, and CIS deduction statements are all captured as you go, and the app produces a tax year summary that maps directly to the boxes on your SA100 and SA103F forms.\n\nYou should also have to hand any P60 or P45 forms from employment during the year, bank interest certificates, pension contribution statements, and Gift Aid records. Even though these do not relate to your trade, they form part of your overall Self Assessment return and affect your total tax liability.

The SA100 is the main Self Assessment form that every taxpayer completes. It captures personal information, employment income, self-employment income (via the SA103F supplement), other income, tax reliefs, and student loan repayments. For most sole trader tradespeople, the SA100 and SA103F are the only forms needed.\n\nThe SA100 begins with personal details and goes on to ask about each type of income you received. You will tick boxes to indicate that you have self-employment income, which tells HMRC to expect the SA103F supplement. If you also had employment income, you tick that box too and complete the employment section. The form guides you through each income type methodically.\n\nThe tax calculation section applies your personal allowance, which is 12,570 pounds for 2025/26, and works out your income tax at the applicable rates: 20 percent basic rate on income between 12,571 and 50,270 pounds, 40 percent higher rate on income between 50,271 and 125,140 pounds, and 45 percent additional rate above 125,140 pounds. Your Class 4 National Insurance is also calculated based on your self-employment profits.\n\nThe return also calculates payments on account for the following year. If your Self Assessment tax bill exceeds 1,000 pounds and less than 80 percent of your total tax was deducted at source, HMRC will require you to make two advance payments towards next year's bill, each equal to half the current year's liability. This catches many tradespeople by surprise in their second year of trading.

For the 2025/26 tax year (6 April 2025 to 5 April 2026), the key filing deadlines are 31 October 2026 for paper returns and 31 January 2027 for online returns. Almost all tradespeople file online, so 31 January is the critical date. This is also the deadline for paying any tax owed for the year and making your first payment on account for the following year.\n\nLate filing penalties are applied automatically. Missing the 31 January deadline by even one day triggers an immediate 100 pound penalty. After three months, HMRC charges 10 pounds per day for up to 90 days, adding up to 900 pounds. At six months late, the penalty increases to 5 percent of the tax due or 300 pounds, whichever is higher. At twelve months, a further 5 percent or 300 pounds is added, and in serious cases HMRC can charge up to 100 percent of the tax due.\n\nLate payment penalties are separate from late filing penalties. Interest is charged on any tax paid after 31 January, currently at the Bank of England base rate plus 2.5 percent. After 30 days, a 5 percent surcharge is added to the unpaid amount. Further 5 percent surcharges apply at six months and twelve months. The combined effect of interest and surcharges makes it expensive to delay payment.\n\nIf you genuinely cannot pay your full tax bill on time, contact HMRC before the deadline to set up a Time to Pay arrangement. This is a formal agreement to pay in instalments over up to twelve months. HMRC are generally more accommodating if you approach them proactively rather than simply not paying and waiting for penalties to accumulate.

Payments on account are advance payments towards your next tax bill, based on the assumption that your income will be similar to the current year. Each payment is half of your previous year's tax bill. The first payment on account is due on 31 January (the same day as your return filing deadline) and the second is due on 31 July.\n\nFor example, if your 2025/26 tax bill is 6,000 pounds, you must pay 6,000 pounds by 31 January 2027, plus a first payment on account of 3,000 pounds for 2026/27. On 31 July 2027, you pay a second payment on account of 3,000 pounds. When you file your 2026/27 return, any difference between your payments on account and actual liability is settled as a balancing payment or refund.\n\nThis system means that in your first year of Self Assessment, you effectively pay 150 percent of your annual tax liability on 31 January, which is a shock for many newly self-employed tradespeople. Planning for this from the outset is essential. A good rule of thumb is to set aside 25 to 30 percent of your self-employment profit each month into a dedicated savings account.\n\nYou can apply to reduce your payments on account if you know your income will be lower next year, for example if you are planning to take time off or reduce your hours. However, if you reduce them too much and end up owing more, HMRC will charge interest on the shortfall. TradeTally includes a tax liability estimator that forecasts your payments on account based on your current year's figures.

HMRC requires you to keep records that support every figure on your tax return for at least five years after the 31 January filing deadline. For your 2025/26 return filed by 31 January 2027, you must keep records until at least 31 January 2032. These records include all invoices issued, bank statements, receipts for business expenses, mileage logs, and any contracts or agreements.\n\nHMRC accepts both paper and digital records, provided they are complete and accurate. Digital records are increasingly preferred and will become mandatory under Making Tax Digital for Income Tax, which is being phased in from April 2026 for sole traders earning above 50,000 pounds. Photographing receipts with TradeTally and storing digital copies of invoices satisfies HMRC's record-keeping requirements.\n\nFor tradespeople, some commonly overlooked records include CIS deduction statements from contractors you have worked for, evidence of mileage such as a log of job locations visited, records separating business and personal use of vehicles and phones, and any written agreements with customers, especially for larger jobs. Keeping these records organised throughout the year dramatically reduces the time and stress of completing your tax return.\n\nIf HMRC opens an enquiry into your return, you will need to provide supporting records within 30 days. If you cannot produce adequate records, HMRC may estimate your income and expenses, usually in a way that is unfavourable to you, and apply penalties for inadequate record keeping of up to 3,000 pounds.