Self Assessment: The Basics

As a freelancer or sole trader in the UK, you must file a Self Assessment tax return each year. The key deadlines are:

  • 5 April — end of the tax year
  • 31 October — paper return deadline
  • 31 January — online return deadline and payment deadline
  • 31 July — second payment on account deadline

Allowable Business Expenses

You can deduct legitimate business expenses from your income before calculating tax. Common allowable expenses include:

  • Home office costs (a proportion of rent, utilities, broadband)
  • Professional subscriptions and memberships
  • Equipment and software used for work
  • Business travel (not commuting)
  • Marketing and advertising costs
  • Accountancy and professional fees
  • Business insurance

Understanding Payment on Account

If your tax bill is over £1,000, HMRC requires you to make "payments on account" — advance payments towards next year's bill. Each payment is 50% of your previous year's tax bill, due in January and July.

This catches many first-year freelancers off guard — you might owe 150% of your expected bill in your first January payment.

The Trading Allowance

The first £1,000 of self-employment income each year is tax-free under the trading allowance. If your freelance income is below this threshold, you don't even need to register for Self Assessment.

Making Tax Digital (MTD)

From April 2026, freelancers earning over £50,000 must use MTD-compatible software to keep digital records and submit quarterly updates to HMRC. Invly is designed to keep your invoicing records organised for exactly this purpose.