First Self Assessment as a sole trader: what do I need to do?

If you have started working for yourself as a sole trader, the first question is usually whether your gross trading income has gone over £1,000 in the tax year. If it has, HMRC normally requires you to register for Self Assessment and report the business income, even if the eventual profit is much smaller after expenses.

You do not need to become a tax expert before you start. The useful sequence is: work out when the trade started, total the income, organise the records, register if required, then prepare the return.

1. Check whether you need to register

HMRC says you must send a Self Assessment return if you were self-employed as a sole trader and earned more than £1,000 gross in the tax year.

Gross income means the money received before deducting business expenses. This catches a common first-year misunderstanding: earning £1,500 and spending £900 does not mean the £1,000 registration test is applied to the £600 profit.

If gross trading income is £1,000 or less, the trading allowance may mean you do not need to tell HMRC about that income, although there are exceptions and reasons you might still choose or need to file.

2. Know the tax year you are dealing with

The UK tax year runs from 6 April to 5 April.

For example, if you started trading in August 2026, that activity falls in the 2026 to 2027 tax year. Your first return may include only the part of the year from when the business started.

The date you started matters because it affects:

• which tax return includes the income;
• the registration deadline;
• which records belong in that return;
• whether any other income belongs in the same Self Assessment.

3. Register with HMRC if required

If you need to file and have not sent a tax return before, HMRC generally expects you to tell them by 5 October following the end of the relevant tax year.

Registration gives you the Self Assessment record needed to file. Do not leave registration until January if you already know you need a return. Waiting until the filing deadline creates an avoidable administrative problem on top of the tax work.

4. Keep the records before worrying about the tax form

For most simple new sole traders, the core records are not exotic. Keep evidence of:

• all sales and business income;
• invoices or platform statements;
• business expenses;
• receipts and supplier invoices;
• bank statements or transaction records;
• any equipment bought for the business;
• personal income that may also need to go on the return.

HMRC does not normally ask you to upload a box of receipts with the return. The records exist so the figures can be calculated accurately and supported if HMRC later asks questions.

A separate business bank account is not always a tax requirement for a sole trader, but separating business transactions from personal spending can make the first return dramatically easier to prepare.

5. Decide how expenses will be claimed

A sole trader with more than £1,000 of gross trading income may either claim allowable business expenses in the normal way or, where eligible, use the trading allowance instead of deducting those expenses.

You do not normally claim the £1,000 trading allowance and then deduct the same business expenses as well.

If actual allowable expenses are substantial, claiming the real expenses may produce a better result. If expenses are tiny, the trading allowance may be simpler. The right answer depends on the figures.

6. Remember that the return covers more than the business

Self Assessment is a personal tax return. Your sole-trader profit is one part of it.

Depending on your circumstances, the same return may also need information about:

• employment income;
• savings interest;
• dividends;
• rental income;
• foreign income;
• capital gains;
• pension contributions or other claims.

This is why a first return can feel confusing even when the business itself is simple.

7. Understand the filing and payment timetable

For a normal online Self Assessment return, the filing deadline is generally 31 January following the end of the tax year. Tax due for the year is also normally payable by 31 January, and some taxpayers may also have payments on account towards the following year.

The filing deadline and the registration deadline are different. Registering is not the same thing as filing the return.

What about Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is being phased in from April 2026 for people whose qualifying self-employment and property income exceeds the applicable thresholds.

Do not assume that simply starting a sole trade means you immediately fall into MTD. The rules use qualifying income and prior-year information, and the thresholds are being phased in. Check the current HMRC MTD guidance for the year concerned.

A simple first-year checklist

Before asking an accountant or preparing the return yourself, have these ready:

1. the date you started trading;
2. total gross sales or fees received;
3. a list of business expenses;
4. bank or payment-platform statements;
5. details of any employment or other personal income;
6. your National Insurance number;
7. your UTR if HMRC has already issued one;
8. any HMRC letters about Self Assessment.

That is enough to turn “I have no idea where to start” into a fairly structured tax job.

When professional help is particularly useful

Consider getting help if:

• records are incomplete;
• more than one tax year is involved;
• the business income is mixed with foreign income, property or investments;
• you are unsure whether payments are business income at all;
• you have already missed a deadline;
• the business has grown quickly and VAT or MTD may also be relevant.

The first return is also a useful time to establish a record-keeping system that will make the second one less irritating than the first.