A self assessment tax return is rarely difficult because of one single figure. Problems usually arise because income has come from several places, records are incomplete, or a deadline has been left until January. For company directors, sole traders, landlords and higher-income taxpayers, getting the return right means more than avoiding penalties. It is an opportunity to understand your tax position early and make better decisions for the year ahead.
Who needs to complete a self assessment tax return?
Not everyone who pays tax needs to file a return. Employees whose only income is taxed through PAYE will often have nothing further to submit. However, the position changes when income, gains or reliefs sit outside straightforward employment.
You will commonly need to register for self assessment if you are self-employed and your gross trading income exceeds the £1,000 trading allowance, a partner in a business partnership, or a company director. Many landlords also need to file, particularly where rental profits have not been dealt with through PAYE. HMRC may require a return where you have received significant investment income, made taxable capital gains, claimed certain tax reliefs, or have paid too little tax through another route.
There are exceptions and thresholds, so it is sensible not to make assumptions based on a friend’s or colleague’s circumstances. For example, a director with no salary, dividends or other untaxed income may have a different filing position from a director drawing a mixture of salary and dividends. If HMRC has issued a notice requiring a return, it must be completed or formally withdrawn, even where you believe no tax is due.
Self assessment deadlines that matter
The tax year runs from 6 April to 5 April. For the 2025/26 tax year, which ended on 5 April 2026, the usual deadlines are 5 October 2026 to tell HMRC if you need to register for the first time, 31 October 2026 for a paper return, and 31 January 2027 for an online return.
The 31 January deadline is also normally the date by which you must pay any tax owed for the previous tax year. Filing early does not mean paying early if you would rather retain cash until the payment date, but it does give you clarity. You can budget for the liability, check whether a payment on account is due, and avoid trying to resolve missing figures in the final days before the deadline.
Late filing can trigger an automatic penalty even if you have no tax to pay. Interest and further charges may follow where payment is late. More importantly for a business owner, last-minute filing turns what should be useful financial information into a rushed compliance task.
Do not overlook payments on account
A common surprise is the payment on account system. If your self assessment bill is more than £1,000 and less than 80% of your tax was collected at source, HMRC will usually ask for advance instalments towards the following year’s bill.
These are generally paid on 31 January and 31 July. The first January payment can therefore include the balancing payment for the year just ended plus the first instalment towards the next year. This can feel like a steep bill, especially for a growing sole trader, landlord or consultant whose profits have risen.
Where income has genuinely fallen, it may be possible to reduce payments on account. Care is needed: reducing them too far can lead to interest if the final liability is higher than expected. A realistic profit forecast is far better than an optimistic guess.
Records turn a tax return into a manageable job
Good records are not just for your accountant or for HMRC. They show whether the business is producing the cash and profit you expected. Waiting until the end of the year to sort bank statements, invoices and receipts makes it harder to spot missed income, duplicate costs or opportunities to plan ahead.
For self-employed people, separate business banking and regular bookkeeping make a substantial difference. Keep sales invoices, purchase receipts, bank records, mileage details where relevant, and evidence of any expenses claimed. Landlords should retain letting statements, repair invoices, mortgage interest information and details of periods when a property was vacant.
Directors should ensure that salary, dividends, benefits and company expenses are recorded correctly. A personal payment made from the company bank account is not automatically a deductible business expense, and the treatment may affect the director’s loan account as well as the company tax position.
HMRC generally expects self assessment records to be retained for at least five years after the 31 January submission deadline for the relevant tax year. Digital records are convenient, but receipts and documents still need to be clear, complete and accessible if questions arise later.
Claiming expenses without creating unnecessary risk
Tax relief is available for expenses incurred wholly and exclusively for your trade or business. That principle is simple, but applying it can require judgement. A laptop used entirely for work is different from a broadband bill, mobile contract or vehicle used for both business and personal purposes.
For mixed-use costs, only the business element should normally be claimed. Being realistic here protects you if HMRC reviews the return. It also gives a truer picture of business profitability, which is particularly valuable when setting prices, considering recruitment or applying for finance.
Some costs are often missed because they are paid personally rather than from the business account. Professional subscriptions, business insurance, accountancy fees, use of home expenses and mileage may all be relevant depending on the facts. Equally, some payments that feel business-related are not deductible in full, or are dealt with under different rules. Capital purchases, entertaining and clothing are familiar areas where a quick assumption can be costly.
The best approach is not to chase every possible deduction. It is to claim the reliefs you are entitled to, supported by sound records and a clear explanation.
Give yourself time to plan, not just file
A return prepared after the year end records what has happened. Prepared early enough, it can also support planning. Knowing your expected taxable income before the end of the tax year may help you decide whether pension contributions, charitable donations, dividend timing or capital expenditure should be considered.
The right action depends on your wider position. A company owner may need to balance personal tax, corporation tax, cashflow and the amount left available for investment in the business. A landlord may be weighing repairs against improvements, while a self-employed professional may need to set aside more money for tax as profits increase. There is no single tax-saving measure that suits everyone.
This is why bookkeeping, accounts and personal tax should work together. Up-to-date information creates choices. Historic information, produced months late, usually does not.
Common self assessment mistakes to avoid
The most expensive errors are often ordinary ones: omitting bank interest or dividend income, claiming private expenditure, forgetting a source of rental income, or entering figures from estimates rather than final documents. Another frequent issue is treating money received as profit without allowing for costs, tax and upcoming payments on account.
It is also worth checking that the return reflects the correct tax year. Income and expenses do not always follow the date money reaches a bank account, particularly for businesses preparing accounts on an accruals basis. If you are unsure, asking before submitting is normally easier than correcting a return afterwards.
For clients with several income sources or changing circumstances, professional preparation provides more than an extra pair of hands. It brings a structured review of the figures, an explanation of what is due and when, and practical advice that fits the wider financial picture. RK & Co can prepare self assessment returns with fixed fees agreed in advance, while helping clients use their numbers to plan with greater confidence.
The most useful time to think about your next return is not the week before 31 January. Put records in order now, set aside money regularly, and deal with questions while there is still time to make a considered decision.