How Do I File Self-Assessment Tax Returns for My Small Business in the UK?

Filing your Self-Assessment tax return can seem daunting, particularly if you are new to running a small business in the UK. However, with the right guidance and understanding of the process, it becomes a manageable task that ensures you remain compliant with HMRC requirements. This comprehensive guide will walk you through everything you need to know about filing Self-Assessment tax returns for your small business.

Who Needs to File a Self-Assessment Tax Return?

If you operate as a sole trader or are a partner in a business partnership, you are required to complete a Self-Assessment tax return each year. This also applies if you are a company director with additional income, receive untaxed income, or have various other circumstances that HMRC requires you to report.

Even if your business made a loss during the tax year, you must still submit a return. This is particularly important as losses can be carried forward to offset against future profits, potentially reducing your tax bill in subsequent years.

Registering for Self-Assessment

Before you can file your first Self-Assessment tax return, you must register with HMRC. If you are starting a new business as a sole trader, you need to register by 5th October following the end of the tax year in which you began trading. For example, if you started your business in July 2024, you must register by 5th October 2025.

When you register, HMRC will send you a Unique Taxpayer Reference (UTR) number. This ten-digit number is essential for filing your return and for all correspondence with HMRC regarding your tax affairs. You can register for Self-Assessment through the HMRC website: Register for Self-Assessment

Understanding the Self-Assessment Deadlines

Meeting your Self-Assessment deadlines is crucial to avoid penalties. There are two key deadline dates you must remember:

Paper returns: 

If you choose to submit a paper tax return, the deadline is 31st October following the end of the tax year (which runs from 6th April to 5th April).

Online returns: 

For online submissions through HMRC's digital system, the deadline is 31st January following the end of the tax year.

Additionally, if you owe tax, you must pay any amount due by 31st January. If your tax bill exceeds £1,000, you may also need to make payments on account (advance payments towards next year's tax bill) on 31st January and 31st July.

Missing these deadlines results in automatic penalties, starting at £100 for returns submitted even one day late, with additional penalties accruing the longer you delay.

Gathering Your Business Records

Accurate record-keeping throughout the year makes filing your Self-Assessment considerably easier. You should maintain detailed records of all your business income and expenses, including:

• Sales invoices and receipts

• Business bank statements

• Purchase invoices and receipts for business expenses

• Mileage records if you claim vehicle expenses

• Records of any assets purchased for the business

• Receipts for any business-related costs such as office supplies, professional fees, insurance, and marketing

HMRC requires you to keep these records for at least five years from the 31st January submission deadline of the relevant tax year. Digital record-keeping systems can make this process more efficient and ensure you have everything organised when it comes time to complete your return.

For detailed guidance on what records you need to keep, visit: Self-Assessment: Records to Keep

Calculating Your Business Profits

Your Self-Assessment tax return requires you to calculate your business profits, which forms the basis for your tax liability. The calculation is relatively straightforward:

Total Business Income minus Allowable Business Expenses equals Taxable Profit

Allowable expenses are costs incurred wholly and exclusively for business purposes. Common allowable expenses include:

• Office costs (rent, utilities, equipment)

• Travel and vehicle expenses

• Staff costs and professional fees

• Marketing and advertising costs

• Business insurance

• Professional subscriptions

• Training courses related to your business

You cannot claim for personal expenses, entertainment costs, or expenses not directly related to your business activities.

HMRC provides comprehensive guidance on allowable expenses: Expenses if You're Self-Employed

Completing Your Self-Assessment Tax Return Online

The most efficient method for filing your Self-Assessment is through HMRC's online system. To access this, you will need:

1. Your Unique Taxpayer Reference (UTR)

2. Your Government Gateway user ID and password

3. Your business income and expense figures

4. Details of any other income you received during the tax year

Once logged in, you will need to complete the main Self-Assessment form (SA100) and the Self-Employment pages (SA103). The online system includes built-in calculators that automatically work out your tax liability once you have entered all the required information.

The SA103 form requires you to provide:

• Your business details (name, description, address)

• Accounting period dates

• Total business turnover

• Allowable business expenses (broken down by category)

• Net profit or loss

• Any capital allowances claimed

• Details of any goods or services taken for personal use

Access HMRC's online Self-Assessment service here: File Your Self-Assessment Tax Return Online

Understanding Your Tax Liability

Once you have calculated your business profit, this amount is added to any other taxable income you have received during the year. Your total income is then subject to Income Tax at the applicable rates:

• Personal Allowance: £12,570 (tax-free in 2024/25)

• Basic rate (20%): £12,571 to £50,270

• Higher rate (40%): £50,271 to £125,140

• Additional rate (45%): Over £125,140

In addition to Income Tax, you must also pay Class 2 and Class 4 National Insurance contributions if your profits exceed certain thresholds. Class 2 National Insurance is charged at a flat weekly rate if your profits are £12,570 or more per year. Class 4 National Insurance is calculated as a percentage of your profits between £12,570 and £50,270 (currently 6%), with a 2% charge on profits above £50,270.

The Self-Assessment system calculates these amounts automatically when you file online, providing you with a complete breakdown of what you owe.

For current tax rates and allowances, see: Income Tax Rates and Allowances

Making Tax Digital for Income Tax Self-Assessment

From April 2026, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) will become mandatory for sole traders and landlords with annual business or property income above £50,000. This threshold will reduce to £30,000 from April 2027.

Under Making Tax Digital, you will need to:

• Keep digital records using MTD-compatible software

• Submit quarterly updates to HMRC throughout the year

• Make a final declaration after the end of the tax year

Even if you are not yet required to join Making Tax Digital, it is worth considering digital accounting software now to prepare for the transition and to make your record-keeping more efficient. Learn more about Making Tax Digital: Making Tax Digital for Income Tax

Common Mistakes to Avoid

When filing your Self-Assessment tax return, be careful to avoid these common errors:

Missing the deadline: Set reminders well in advance of the 31st January deadline to ensure you complete and submit your return on time.

Incorrect or incomplete records: Ensure all your business income and expenses are accurately recorded and that you have supporting documentation.

Claiming non-allowable expenses: Only claim expenses that are wholly and exclusively for business purposes. Personal expenses and entertainment costs are not allowable.

Forgetting to include all income sources: You must declare all taxable income, including any employment income, rental income, investment income, or other sources alongside your business profits.

Arithmetic errors: Although the online system calculates automatically, if you are preparing figures beforehand, double-check all calculations.

Not claiming all allowable expenses: Review your expenses carefully to ensure you claim everything you are entitled to, including capital allowances on equipment and vehicles.

Paying Your Tax Bill

Once you have submitted your Self-Assessment tax return, you must pay any tax owed by 31st January. HMRC accepts payment through various methods:

• Online or telephone banking

• Debit or corporate credit card online

• Direct Debit (you can set up a budget payment plan or pay in full)

• By cheque through the post

If you cannot pay your tax bill in full by the deadline, contact HMRC as soon as possible. They may be able to arrange a Time to Pay arrangement, allowing you to spread the payments over a longer period. However, interest will be charged on any outstanding amount. For payment options and guidance: Pay Your Self-Assessment Tax Bill

Getting Professional Help

Whilst many small business owners successfully complete their own Self-Assessment tax returns, there are significant benefits to engaging professional assistance, particularly as your business grows or if your tax affairs become more complex.

A qualified accountant can:

• Ensure you claim all allowable expenses and reliefs

• Minimise your tax liability through legitimate tax planning

• Save you time and reduce stress

• Provide ongoing business advice and support

• Help you prepare for Making Tax Digital requirements

• Represent you in any communications with HMRC

At Barnett & Co Accountants, we specialise in supporting small businesses with their Self-Assessment tax returns and all aspects of tax compliance. Our experienced team can handle your tax affairs efficiently whilst ensuring you take advantage of all available tax reliefs and allowances.

Conclusion

Filing your Self-Assessment tax return for your small business does not need to be overwhelming. By maintaining accurate records throughout the year, understanding the deadlines, and familiarising yourself with what you need to report, you can approach your tax return with confidence.

Remember to register for Self-Assessment if you have not already done so, gather all your business income and expense records, and submit your return well before the 31st January deadline. Whether you choose to complete your return yourself or engage professional support, ensuring compliance with HMRC requirements protects your business and gives you peace of mind.

If you would like assistance with your Self-Assessment tax return or have questions about your specific circumstances, please contact Barnett & Co Accountants. We are here to help you navigate the complexities of UK taxation and ensure your small business remains compliant whilst minimising your tax liability.

Useful HMRC Resources:

• Self-Assessment Tax Returns Overview

• Register for Self-Assessment

• File Your Self-Assessment Tax Return Online

• Self-Assessment: Records to Keep

• Expenses if You're Self-Employed

• Income Tax Rates and Allowances

• Pay Your Self-Assessment Tax Bill

For expert assistance with your Self-Assessment tax return and all your accounting needs, contact Barnett & Co Accountants at Electra House, Electra Way, Crewe CW1 4SS. We provide comprehensive accounting services including Self-Assessment support, company formations, VAT registration, Small Business Support and Making Tax Digital compliance.