First Time Doing a Self Assessment? The Calm, Plain English Guide

If self assessment is sitting on your to-do list with a small cloud hanging over it, you are very much not alone. First timers nearly always say the same thing afterwards: “that was easier than I built it up to be.”

The bad news is that HMRC’s website is dense, the language can feel deliberately unhelpful, and nobody hands you a friendly guide when you go self employed. The good news is that self assessment is mostly admin, not maths. Once you know the steps, what you need, and when, it stops being scary.

Here is the calm, plain English version. Read it in five minutes, and you will know exactly what you are doing.

Important: This guide relates to the 2025/26 tax year (6 April 2025 to 5 April 2026).

If you’re completing a Self Assessment tax return for a different tax year, some allowances, rates and thresholds may be different. Always check the latest HMRC guidance or speak to an accountant if you’re unsure.

The filing and payment deadline for the 2025/26 tax year is 31 January 2027.

Who actually needs to do a self assessment?

You need to file a return for the tax year (6 April to 5 April) if any of the following applied to you in that year:

• You earned more than £1,000 from self employment, including any kind of side hustle, freelance work, or trading.
• You earned untaxed income from things like renting out property, foreign income, savings interest above the allowance, or dividends above the allowance.
• You are a company director and want to declare extra income, or you receive Child Benefit and either you or your partner earn over £60,000.

The first one is the most common. The £1,000 figure is the trading allowance. If you earned under it, you usually do not need to file. If you earned over it, you do, even if it was just a side hustle alongside your day job.

If you are not sure whether you need to file, HMRC has a quick checker tool on their website, and you can always book a free call with us and we will tell you straight.

The dates you actually need to know

You only really need to remember four:

• 5 October after the tax year ends: deadline to register with HMRC if you have not filed before.
• 31 October: deadline to file if you are doing a paper return.
• 31 January 2027: deadline to file your 2025/26 tax return online and pay any tax owed. 
• 31 July: deadline for a second payment on account, if you have one.

Almost everyone files online now, so the date that matters most is 31 January. Miss it and you get an automatic £100 penalty, even if you have no tax to pay.

Step 1: Register with HMRC

If this is your first self assessment, you need to register first. You cannot just turn up and file; HMRC need to set you up.

Go to gov.uk and search for “register for self assessment”. Pick the option that fits you, usually “self employed”. It takes about 10 minutes to fill in.

HMRC then post you a UTR (Unique Taxpayer Reference). It is a 10 digit number, and you will need it every year. Keep it somewhere safe. The letter usually arrives within two weeks but can take longer in busy periods, so do not leave this until January.

Step 2: Gather what you need

Before you open the return, get this together in one folder or one spreadsheet:

• Your UTR from HMRC.
• Your National Insurance number.
• Your income. Records of money received and any invoices issued, depending on the accounting method you use.
• Your expenses. Receipts, bank statements, anything you spent on the business.
• Any other income. Payslips if you also have a regular job, P60s, P45s, dividend vouchers, rental income, interest from savings, and so on.

This is the bit that takes most of the time, especially the first year. After that, if you keep a tidy monthly record, it takes minutes. (If your records are currently a carrier bag of receipts, our bookkeeping service is built for exactly this.)

Step 3: Know what you can claim

Most first timers pay more tax than they need to, because nobody told them what counts as an allowable expense. The rule is simple: if a cost is wholly and exclusively for your business, it usually counts.

Common examples for sole traders:

• Use of home as office Use of home for business, either by claiming a proportion of actual household costs or using HMRC’s simplified flat rate method.
• Mileage for business travel For the 2025/26 tax year, mileage for business travel can be claimed at HMRC’s approved rate of 45p per mile for the first 10,000 business miles and 25p per mile thereafter when using the simplified expenses method.
• Software, subscriptions and apps you use for the work.
• Phone and internet, in proportion to business use.
• Marketing, website, accountancy fees and bank charges.
• Tools, equipment and materials.
• Training that relates to your existing business.

None of this is creative accounting. It is the standard list HMRC expect you to claim. If you are not sure whether something counts, it is worth asking before you guess, because the difference can be hundreds of pounds.

Step 4: Fill it in

Log in to your gov.uk account, find self assessment, and start a new return for the right tax year. The form is broken into sections and you only complete the bits that apply to you.

For most sole traders, that means filling in three areas:

• Self employment. Your business name, what you do, your turnover, and your expenses (either as a single total or broken down into categories).
• Other income. Anything you earned outside the business: a salary, savings interest, dividends, rental income.
• Tax already paid. Tax deducted by your employer through PAYE, for example.

HMRC then calculates the tax and National Insurance you owe and shows you the total before you submit. Take a screenshot or print the summary; future-you will thank you.

Step 5: Submit and pay

Once you are happy, hit submit. You will get a confirmation reference on screen and an email. Save both.

Tax owed is due by 31 January. If your tax bill is more than £1,000, HMRC may ask for payments on account towards the following tax year. These are usually two advance payments, each worth 50% of the previous year’s Income Tax and Class 4 National Insurance liability.

 This catches a lot of first timers out, so budget for it.

You can pay by bank transfer, debit card, or via your online HMRC account. Just do not leave it to the day, because banks can be slow on busy deadlines.

What usually trips first timers up

Almost all the panic comes from a handful of avoidable issues:

• Leaving registration too late. The UTR letter can take weeks. Register in October, not January.
• Forgetting the payment on account. Many first-time sole traders are surprised that they may need to pay both their current year’s tax bill and the first payment on account towards the following year at the same time. Plan the cash flow now, not on the night.
• Mixing personal and business money. A separate business bank account makes everything ten times easier. It is one of the simplest things you can do to make next year’s return painless.
• Guessing at expenses. Either claim them properly or do not claim them at all. Made-up figures are how returns get queried.

How to make next year easier

Once you have done one return, the second is genuinely faster. Three habits make the difference:

1. Open a separate bank account for the business, even as a sole trader.
2. Log income and expenses monthly, not annually. A 10 minute habit beats a 10 hour panic.
3. Put aside roughly 25% to 30% of every payment for tax, in a separate savings account. When the bill arrives, the money is already there.

That is genuinely it. Self assessment is admin, not magic. Treat it as a monthly tidy up rather than an annual emergency, and it stops feeling heavy.

If you would rather hand it over

Plenty of people do their own self assessment and that is absolutely fine. Plenty of others would rather spend that evening doing literally anything else. If you would like us to take it off your hands, we offer a fixed-fee self assessment service with no surprises and no jargon. You send us the numbers, we do the rest, and we sense check what you can claim along the way.

If you just want to talk it through first, book a free 15 minute call and we will give you a straight answer.