Sole Trader Tax Checklist 2025

Stay compliant and confident with our step-by-step guide.

Sole Trader Tax Checklist

Stay ahead of HMRC with this easy-to-follow checklist for UK sole traders. We break down what you need, when you need it, and how to avoid costly surprises.

Sole trader reviewing tax checklist on a digital tablet

✅ Register for Self Assessment

If you haven’t already registered with HMRC as a sole trader, do it right away. It’s free, and you must do it by 5 October in your second tax year. Don’t delay — penalties can apply.

✅ Keep Proper Records

Record all income and business expenses. You’ll need these to complete your Self Assessment and to prove your numbers if HMRC ever checks. Use software or a tidy spreadsheet — just make sure it’s consistent.

✅ Know Your Tax Deadlines

Paper returns are due by 31 October, but most people file online by 31 January. This is also your deadline to pay tax owed — and make a Payment on Account if applicable.

✅ Understand Allowable Expenses

From home office costs to travel, marketing, phone bills and tools — if it’s a genuine business expense, it’s likely deductible. This reduces your taxable profit and your tax bill.

✅ Budget for National Insurance

If you earn above certain thresholds, you’ll owe Class 2 and Class 4 National Insurance. These are paid alongside your Self Assessment. Budget at least 20–30% of your profit to cover tax + NI.

Taxes don’t have to be stressful. A little preparation goes a long way. Stay organised throughout the year and tax season becomes just another simple task on your calendar.

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Sole Trader Tax Questions – Answered Simply

What tax do I pay as a sole trader in the UK?

Sole traders pay income tax on their profits through a Self Assessment return, plus National Insurance (Class 2 and 4). The amount depends on your earnings. Budgeting 20–30% of profits is a safe start.

What can I claim as expenses as a sole trader?

You can deduct genuine business costs such as travel, marketing, phone, home office use, equipment, and software. These reduce your taxable profit — and your final tax bill.

When do I file my tax return?

The deadline for online Self Assessment submissions is 31 January 2026 for the 2024/25 tax year. Payment of tax and National Insurance is also due by this date.

What happens if I miss the deadline?

HMRC charges an automatic £100 penalty if you file late, even if you don’t owe any tax. Further penalties and interest apply the longer you delay. Don’t risk it — prepare ahead.

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