So you’ve started your own business—amazing! 🎉 You’re in charge now, but with great power comes… yep, tax responsibilities! Don’t panic—we’re here to break it down so it’s clear, manageable, and stress-free.

 What is Self Assessment?

If you’re self-employed, you’ll need to submit a Self Assessment tax return every year. This is how you tell HMRC (His Majesty’s Revenue & Customs) how much you’ve earned, what you’ve spent on your business, and how much tax and National Insurance you owe.

 Tax years run from 6 April to 5 April the following year.
  You must submit your tax return online by 31 January each year:

 🔗 Submit your Self Assessment return online

Miss the deadline? You could be fined £100 or more—so pop it in your calendar now! 

Key Things to Know:

Sole Trader or Limited Company?

There are different rules depending on how you’ve set up:

Sole Traders:

• Pay Income Tax on profits above £12,570 (your personal allowance for 2024/25).
• Pay Class 2 and Class 4 National Insurance, depending on how much you earn.
  
   🔗 Self-employed tax and National Insurance explained

Limited Company Directors:

• Pay tax on salary (via PAYE) and on dividends from company profits.
• Also file a Corporation Tax return and keep up with company obligations.

Not sure which structure suits you best?  Why not book in with one of our mentors to chat through your options, and keep an eye out for our Start Your Own Enterprise workshops, where we cover all the key aspects of starting and running a business.

Registering with HMRC

Once you become self-employed, you must register with HMRC within 3 months to avoid a £100 fine.

Register online:

 🔗 Register for Self Assessment and get a UTR number

Or call HMRC’s Newly Self-Employed Helpline on 0300 200 3500

How Much Tax Will I Owe?

It depends on:

• Your income
• Your business expenses
• Whether you need to pay Class 2 or Class 4 National Insurance

 Use HMRC’s online tool to estimate your tax bill:

 🔗 HMRC Self Assessment calculator

Top tip: Save about 30% of your income to cover tax and NI contributions—just to be safe!

Keep Good Records

Keep clear, accurate records of:

• Your business income and personal income
• Sales invoices and receipts
• Business expenses
• VAT records (if registered)

You must keep these for at least 5 years after the Self Assessment deadline.

Whether it’s digital or paper-based, choose a system that works for you—just make sure it’s up to date!

Paper or Online?

You can submit your Self Assessment by post or online. We recommend going online—it’s easier, faster, and gives you until 31 January to file (paper deadline is 31 October).

🔗 How to file your return online

DIY or Get Help?

If you’re comfortable with numbers and organised with your finances, you may be fine doing it yourself. But if it feels overwhelming, hiring a bookkeeper or accountant can make a huge difference.

Need a second opinion? Book in with a Tree Shepherd mentor and talk it through. We’re here to help! 

What Are “Payments on Account”?

If your tax bill is more than £1,000, HMRC may ask you to make advance payments towards the current year’s tax. These are called payments on account, and they’re due:

• 31 January
• 31 July

So yes—come January, you might owe more than expected!

 🔗 Learn about Payments on Account

You can ask to set up monthly payments with HMRC if that works better for your cash flow.

What Happens If I Don’t Pay?

If you miss a deadline or underpay your tax, HMRC can charge interest and penalties.

Avoid this by staying on top of your finances and filing on time.
If you’re struggling, always contact HMRC early—they may be able to help with a payment plan.

Final Tips for Tax Confidence

✔️ Keep your records updated
✔️ File early to avoid the last-minute rush
✔️ Talk to a mentor if you’re unsure about anything
✔️ Bookmark the HMRC website—it’s packed with helpful tools and guides

We know tax can feel intimidating at first—but trust us, once you get the hang of it, it becomes part of the rhythm of running your business. And you’re not alone—we’re here to support you every step of the way. 💪🏾✨

Book a free 1:1 mentoring session now at treeshepherd.org.uk, and let’s make sure you’re not just surviving—but thriving!