How to Prepare for Self Assessment

Key Deadlines

Missing Self Assessment deadlines results in automatic penalties and interest charges. Mark these dates in your calendar:

For the 2025/26 tax year (6 April 2025 - 5 April 2026):

• 5 October 2026: Deadline to register for Self Assessment if you haven't filed before
• 31 October 2026: Deadline for paper tax returns (rare now, but still available)
• 31 January 2027: Deadline for online tax returns AND payment of tax owed
• 31 July 2027: Second Payment on Account due (if applicable)

Payment on Account explained:
If your Self Assessment tax bill exceeds £1,000 and less than 80% was collected through PAYE, HMRC requires advance payments towards next year's tax. These are called Payments on Account — two instalments of 50% each of your previous year's bill.

For example, if your 2025/26 tax bill is £6,000, you'll also make two Payments on Account of £3,000 each (31 January and 31 July) towards your 2026/27 bill.

What Records You Need

Gathering documentation before you start makes the process much smoother. You'll need:

Income records:

• All invoices issued during the tax year
• Bank statements showing income received
• P60/P45 from any employment
• P11D for benefits in kind from employment
• Interest statements from banks and savings accounts
• Dividend vouchers if you have investments
• Rental income records (if applicable)

Expense records:

• All business purchase receipts and invoices
• Mileage log for vehicle expenses
• Home office calculation (rooms, hours worked)
• Equipment purchase records
• Professional subscription receipts
• Training and development costs

Other documentation:

• Previous year's tax return (for reference)
• National Insurance number
• Unique Taxpayer Reference (UTR)
• Government Gateway login details
• Pension contribution statements
• Gift Aid donation records

Income to Include

You must declare all taxable income from the tax year, regardless of whether you received payment in that year. Freelancers typically use the "cash basis" or "accruals basis" for accounting.

Cash basis (most common for freelancers):
Count income when it's received, not when invoiced. If you invoiced in March 2026 but were paid in April 2026, the income falls in the 2026/27 tax year (April start).

Accruals basis:
Count income when earned/invoiced, regardless of payment date. The March 2026 invoice counts in 2025/26 even if paid later. This is mandatory for businesses with turnover over £150,000.

Types of income to declare:

• Self-employment income: All freelance work, consulting, sales
• Employment income: PAYE jobs, shown on your P60
• Interest: Bank interest, even small amounts
• Dividends: Company dividends received
• Rental income: Property letting income and expenses
• Other income: Crypto gains, foreign income, etc.

Expenses to Deduct

Allowable business expenses reduce your taxable profit. Common freelancer expenses include:

Operating expenses:

• Software subscriptions (Adobe, accounting software)
• Web hosting and domains
• Phone and internet (business proportion)
• Office supplies and stationery
• Professional memberships
• Insurance (professional indemnity, public liability)

Home office expenses:

• Simplified rate (£10-£26/month based on hours worked)
• Or calculated proportion of utilities, rent, council tax

Travel expenses:

• Mileage (45p per mile first 10,000, 25p thereafter)
• Or actual vehicle costs (business proportion)
• Public transport for business journeys
• Accommodation for business trips

Capital allowances:

• Equipment, computers, furniture (via Annual Investment Allowance)
• Vehicles (special rules apply)

Calculate your profit:
Total Income - Total Allowable Expenses = Taxable Profit (Self-Employment)
This figure goes on your tax return and is combined with other income to calculate total tax due.

Step-by-Step Filing Process

Here's how to complete your Self Assessment return:

Step 1: Log in to HMRC
Access your Government Gateway account at gov.uk. If you haven't registered, do so well before the deadline — verification can take time.

Step 2: Start your return
Begin a new Self Assessment return for the relevant tax year. The system guides you through various sections based on your circumstances.

Step 3: Complete the sections
You'll work through sections including:

• Personal details: Verify name, address, NI number
• Employment: Enter P60/P45 figures if employed
• Self-employment (SA103S or SA103F): Your business income and expenses
• UK property: Rental income (if applicable)
• Interest, dividends: Investment income
• Tax reliefs: Pension contributions, Gift Aid

Step 4: Self-employment section details
For the self-employment pages (the core freelancer section):

• Business name and description
• Total turnover (income) for the year
• Allowable expenses (itemised or summarised)
• Net profit calculation
• Capital allowances claimed
• Choice of cash or accruals basis

Step 5: Review and submit
HMRC calculates your tax. Review the figures carefully. Submit when satisfied. You'll receive an acknowledgement — save this confirmation.

Common Mistakes to Avoid

These errors cause delays, penalties, or overpaid (or underpaid) tax:

Missing income:
Forgetting bank interest, small freelance jobs, or cryptocurrency gains. HMRC receives data from employers, banks, and platforms — they may know about income you forgot.

Double-counting expenses:
Claiming the same expense twice (e.g., home office simplified rate AND actual utilities). Choose one method per expense category.

Wrong accounting basis:
Mixing cash basis and accruals within the same return. Pick one and apply it consistently.

Not claiming legitimate expenses:
Many freelancers under-claim through forgetfulness or uncertainty. Review your bank statements systematically — every business transaction should be categorised.

Personal expenses as business:
Claiming personal costs as business expenses is illegal. Mixed-use items require honest apportionment. HMRC can investigate and apply penalties.

Forgetting Payments on Account:
If you're newly self-employed and owe significant tax, the 31 January bill includes the current year's tax PLUS 50% advance for next year. This catches many new freelancers by surprise.

What Happens After Filing

Once you've submitted your return:

Immediate acknowledgement:
You'll receive confirmation with a reference number. Save this as proof of submission.

Tax calculation:
HMRC provides an SA302 tax calculation showing how your bill was computed. Review this for accuracy.

Payment options:
Pay via bank transfer, Direct Debit, debit card, or even payment plan if you can't afford the full amount. Setting up a budget payment plan (monthly Direct Debit) spreads the cost.

HMRC review:
HMRC may query your return or open an enquiry. Most returns aren't investigated, but keep records for at least six years in case.

Amending your return:
Discovered a mistake? You can amend online returns for up to 12 months after the filing deadline. Beyond that, contact HMRC directly.

Next year's cycle:
Once filed, you're registered for Self Assessment. HMRC will send reminders for future years. Keep records continuously throughout the tax year to make next year's filing smoother.

Self Assessment becomes routine with practice. The key is maintaining organised records year-round, understanding your deadlines, and filing early enough to resolve any issues before penalties apply.