Starting out as self-employed is exciting. But, when January rolls around, many new freelancers and side hustlers suddenly realise the huge responsibility that sits on their shoulders: a tax return.
If this is your first Self Assessment, you’re not alone in feeling a little unsure. Perhaps you’re wondering what income needs to be included, what expenses to claim, how much tax you’ll owe and how to avoid mistakes and penalties.
The good news is that once you understand the basics, Self Assessment is a lot more manageable than you might think. Even better, in this guide we walk you through everything you need to know before the 31st January deadline.
So, sit back and prepare to get ready once and for all…
Do I need to file a Self Assessment tax return?
You’ll usually need to file a Self Assessment tax return if, during the last year, you:
- Were self-employed as a sole trader
- Earned money from freelancing or a side hustle that exceeded £1,000
- Had income that wasn’t taxed automatically
This means that even if self-employment wasn’t your main income, you may still need to file if you earned more than the trading allowance.
Key dates every new self-employed person must know
Missing deadlines and filing late can lead to penalties and fines so make a note of these dates:
- 5 October – Deadline to register for Self Assessment (first-timers)
- 31 January – Deadline to:
- File your tax return online
- Pay any tax owed to HMRC
- Make your first payment on account (if required)
Research shows that on deadline day itself last year, over 700,000 taxpayers submitted their returns, with more than 30,000 people filing in the final hour before midnight.
Even with millions filing on time, HMRC estimates that around 1.1 million taxpayers missed the 31 January deadline, potentially facing late filing penalties.
What income do I need to include?
One of the most common mistakes people make when it comes to Self Assessment is under-reporting income. You need to include all income related to your self-employment including:
- Invoices paid and unpaid
- Cash payments
- Tips and commissions
- Online sales
- Side hustle income alongside a PAYE job
This is where good software can help, ensuring your records are perfect and that you’re therefore able to include everything accurately.
What expenses can I claim? And why does it matter?
Allowable expenses reduce your overall taxable profit. In short, this means you have less tax to pay. However, many people fall short as they simply don’t know what’s claimable.
Common allowable expenses include:
- Office costs (phone, internet, stationery)
- Travel and mileage
- Marketing and advertising
- Software and subscriptions
- Professional fees
- Use of home as an office
This is just the starting point. There are plenty more potential deductions and claiming them correctly can make a big difference to your tax bill.
GoSimpleTax even has a handy calculator to help you see how much you could claim if you work from home.
What is a payment on account?
This is an area that catches many new self-employed people off guard.
If your tax bill is above a certain amount, HMRC may ask you to make a payment on account. This is an advance payment towards next year’s tax.
This means that on 31 January, you may need to pay:
- Your tax bill for the year just ended
- Plus a portion of next year’s expected tax
While it can feel frustrating, it’s normal and understanding it early helps you plan ahead.
Common mistakes people make
Here are some pitfalls to avoid:
- Missing the 31 January deadline
- Forgetting to include all income
- Not claiming allowable expenses
- Misunderstanding payments on account
- Guessing figures instead of checking records
Using tax software designed for self-employed people helps reduce these risks significantly.
How to file your tax return (without stress)
One of the best things you can do when it comes to tax season is to use tax software to take away some of the burden and guesswork. This is where GoSimpleTax comes in. It:
- Was built for freelancers, contractors and side hustlers
- Uses plain-English questions
- Automatically calculates your tax
- Submits directly to HMRC
Plus, if you need extra help, GoSimpleTax also offers:
- Free Self Assessment webinars
- Step-by-step filing guides
- Extended support hours in January, including evenings and weekends
Make a start today
Your Self Assessment doesn’t have to be overwhelming. With the right guidance and tools, you can file confidently, avoid mistakes and even reduce your tax bill. You just need to start early and use software designed to support you – just like GoSimpleTax.