Your first Self Assessment tax return

Step 1: register with HMRC

You must register for Self Assessment as a sole trader if you earn more than £1,000 (gross, before expenses) from self-employment in a tax year. The deadline is 5 October after the end of the tax year in which you started: begin trading in August 2026 (tax year 2026/27) and you have until 5 October 2027. Registering late risks a penalty, and registering early costs nothing, so most people should simply do it as soon as trading looks real.

Registration is done online through GOV.UK. HMRC then posts your Unique Taxpayer Reference (UTR), a ten-digit number you will need for every return; if you were registered in the past, your old UTR is reactivated. Guard it like a bank detail.

One footnote: if your gross trading income is £1,000 or less, the trading allowance usually covers it entirely and you generally do not need to register at all.

Step 2: keep records from day one

HMRC requires records of business income and expenses from the moment you start, and you must keep them for at least five years after the 31 January filing deadline. The habit that makes everything downstream painless is separating business banking early and reconciling monthly. If you are starting from a pile of statements instead, our free bank statement analyzer extracts and categorises transactions against the SA103 expense headings, and the receipt scanner turns paper receipts into a digital expense list.

Step 3: know your deadlines

Almost everyone files online now, and the return covers the tax year that ended the previous 5 April. Filing early does not mean paying early: payment is still not due until 31 January, and early filing tells you the size of the bill months in advance.

Step 4: brace for the first payment

Here is the surprise. If your first year's bill is £1,000 or more and little of your tax is collected at source, HMRC also requires payments on account towards the next year: 50% of the bill on the same 31 January, and another 50% on 31 July. Your first January can therefore cost one and a half times the tax you calculated. It is not a penalty and it is entirely predictable; our payments on account guide works through the numbers.

What you'll actually file

The return is the SA100 core form plus supplementary pages: self-employment income goes on the SA103, rental income on the SA105. You will report turnover, expenses (itemised or, below the VAT threshold, as one total), and claim any allowances. Since 2024/25 the cash basis is the default way to calculate trading profits, which for most small traders means simply: money in when received, money out when paid.

Also worth knowing on day one: National Insurance is charged through the same return, and once your gross income from self-employment and property passes HMRC's thresholds you will be brought into Making Tax Digital, which replaces the annual scramble with quarterly updates.

Common first-year mistakes

The same handful of errors causes most first-year pain, and every one of them is avoidable:

• Registering late. The 5 October deadline exists so HMRC can set you up before the filing season; miss it and you are relying on filing and paying on time anyway to escape a failure-to-notify penalty.
• Leaving the online account until January. Signing in for the first time involves identity checks and, in some cases, codes sent by post. Set the account up months before you need it, not the week the return is due.
• Forgetting payments on account. If your first bill is £1,000 or more, 31 January usually brings 150% of it. Budgeting only for the bill itself is the classic first-year shock; see our payments on account guide.
• Claiming the £1,000 trading allowance and expenses. It is one or the other. The allowance wins only when your real costs are under £1,000.
• Mixing business and personal money in one account. A separate account costs nothing and makes every later step, from expense claims to quarterly updates, dramatically easier.
• Binning the paperwork. You must keep the records behind a return for at least five years after the 31 January deadline. Digital copies count, so scan receipts as you go rather than reconstructing a shoebox in year five.

Frequently asked questions