If you are a sole trader, freelancer, or landlord in the UK, filing a self assessment tax return is a legal requirement — and the rules are changing significantly from April 2026. This guide covers what you need to include, the deadlines you cannot miss, and what the shift to Making Tax Digital means for your business right now.

Why self assessment is more complicated in 2026

Self assessment has never been straightforward, but the 2026 tax year brings a material change that affects hundreds of thousands of sole traders and landlords across the UK. From 6 April 2026, if your qualifying income exceeds £50,000, you are legally required to use Making Tax Digital for Income Tax (MTD for IT). That means keeping digital records and sending quarterly updates to HMRC rather than one annual return.

The threshold drops further in coming years: to £30,000 from April 2027, and to £20,000 from April 2028. If you are approaching any of these thresholds, this is the right time to understand exactly what you are required to do. Leaving it until a deadline is close creates real risk of penalties and missed submissions.

Where most self assessment returns go wrong

The majority of errors in self assessment are not the result of deliberate wrongdoing. They come from missed deadlines, incomplete records, and genuine confusion about what qualifies as an allowable expense. Understanding where problems typically occur is a practical first step to avoiding them.

Missing registration and filing deadlines

If you are filing for the first time, you must register with HMRC by 5 October following the end of the tax year in question. For online returns, the submission deadline is 31 January after the tax year ends. A £100 fixed penalty applies immediately if you miss the online deadline, even if you owe no tax at all. From April 2026, a new points-based system also applies for late quarterly MTD submissions, where accumulating four penalty points triggers a separate £200 fine.

Claiming the wrong expenses or missing legitimate ones

Uncertainty about allowable expenses is one of the most common challenges sole traders face, and it comes up repeatedly in real-world discussions among business owners during filing season. Overclaiming puts you at risk of an HMRC enquiry. Underclaiming means you pay more tax than you legally owe. Both outcomes are avoidable with accurate, well-organised records throughout the year.

The process for completing your self assessment return

Before you can file, you need the right information in one place. Rushing the return without preparing your records first is one of the most reliable ways to make an error. Here is the sequence I work through with clients to make the process as clean as possible.

1. Register with HMRC before 5 October following the tax year end if this is your first return. You will receive a Unique Taxpayer Reference (UTR) number, which you need before you can file anything.
2. Gather your income records for the tax year: invoices, bank statements, and any income from employment, rental property, or other sources. If you use Xero, your income figures are already categorised and ready to pull from your accounts.
3. Identify your allowable business expenses. These reduce your taxable profit and therefore your tax bill. Common categories include business mileage, professional subscriptions, home office costs, and equipment. Only include costs that were incurred wholly and exclusively for business purposes.

Once your figures are correct, you submit online via your HMRC Self Assessment account by 31 January. Your tax bill is also due by this date, along with the first payment on account for the following year if applicable. A second payment on account is due by 31 July. If you miss the payment deadline, late payment penalties apply: 3% after 15 days, a further 3% after 30 days, and 10% per annum from 31 days onwards.

DIY versus using a bookkeeper: what each option actually costs

There is a genuine trade-off between filing your own return and paying someone to handle it. The right answer depends on how complex your finances are, how confident you are with tax rules, and what your time is actually worth to your business. The table below sets out the practical difference.

What to do right now

Whether the January deadline is close or months away, there are practical steps you can take today that will make your self assessment return more accurate and less stressful. If you are in scope for MTD for Income Tax from April 2026, some of these are no longer optional.

• Check your registration status. If you have not yet registered for self assessment and the 5 October deadline for your tax year has passed, contact HMRC immediately. Late registration does not cancel your obligation to file.
• Start keeping digital records if you are not already doing so. From April 2026, sole traders with income over £50,000 must maintain digital records under MTD for Income Tax. Xero is a practical way to do this and keeps your quarterly figures ready to submit.