Books kept current
Bank feed, receipts from your phone, a monthly reconciliation. You stop being the person who has to remember.
Sole traders
Nobody takes the tax off before the money reaches you
That is the whole difference, and it is why a good year catches people out rather than a bad one. We keep the books current, tell you what to set aside as you earn it, and finish the return long before January.
What you get
- A named accountant, not a queue
- Your return finished months early
- Bank feed and receipts from your phone
- A running figure for what to set aside
- Ready for Making Tax Digital
- One fixed monthly fee
The numbers that decide it
Four figures worth knowing by heart
A sole trader's year is governed by four of them. The rest is detail.
£1,000Trading allowance — below this, no return needed for it
£90,000VAT registration, on rolling 12-month turnover
50%Of this year's tax, again, as a payment on account
Apr 2026MTD for Income Tax starts above £50,000
2026/27 figures. See key tax dates and the calculators for the full picture.
Your year
Six dates, and only two of them move
Everything on a sole trader's calendar is fixed except the VAT one, which depends on you rather than the date.
6 AprilThe tax year starts. Nothing to do, but everything after this date belongs to a new return.
5 OctoberRegister for Self Assessment if this is your first year.
31 OctoberPaper return deadline, if you were ever going to file one on paper.
31 JanuaryOnline return, the balancing payment, and your first payment on account. All on one day.
31 JulySecond payment on account.
Any timeCross £90,000 of rolling turnover and you must register for VAT within 30 days.
Source: gov.uk Self Assessment and VAT deadline guidance, checked July 2026. See key tax dates.
What the year actually feels like
Nobody deducts it for you
If you have only ever been employed, the shift is not really about accounting. It is that nothing is taken off before the money arrives. Every payment that lands is gross, some of it is already spoken for, and there is no payslip telling you which part.
That is why the January bill catches people who have had a good year rather than a bad one. The tax is not a surprise in principle. It is a surprise because the money was spent while it was sitting in the same account as everything else.
The fix is boring and it works: a second account, a fixed percentage moved the day each payment lands, and books that are current enough to tell you what the percentage should be. Most of what we do for a sole trader is make that automatic.
Where it goes wrong
Five things, and none of them are exotic
- One bank account for everything
- Legal for a sole trader, and still the single biggest cause of a bad year end. Every line has to be judged rather than coded, which is slower, dearer and less accurate — and it makes an HMRC enquiry a much longer conversation than it needed to be.
- Nothing set aside
- Tax is not a bill that arrives, it is a share of money you have already been paid. If it is not moved out as it is earned, January is a cash flow event rather than an administrative one.
- The reliefs nobody mentioned
- Use of home, mileage, pre-trading costs in the seven years before you started, capital allowances on equipment, pension contributions, losses carried forward. Reliefs are not claimed automatically and a return prepared from a bank total will miss most of them.
- Leaving it to January
- A return prepared in the last fortnight is prepared from whatever can be found in the last fortnight. It also removes any chance of doing something about the figure, because the tax year closed nine months earlier.
- Not being ready for Making Tax Digital
- From 6 April 2026 sole traders with qualifying income over £50,000 keep digital records and file quarterly. The year to move onto software is the one before that starts. Our MTD checker tells you which year catches you.
The bill nobody warns you about
Payments on account, in your first good year
A £45,000 profit year
Your first full year of self-employment to 5 April 2027, £45,000 of profit, no other income. The tax itself is not the shock. What happens next to it is.
- Income tax — 20% on £32,430 above the personal allowance
- £6,486
- Class 4 National Insurance — 6% on the same £32,430
- £1,946
- Class 2 — profits above £7,105, treated as paid
- £0
- Tax for the year
- £8,432
- First payment on account for next year — half again, due the same day
- £4,216
- Due on 31 January 2028
- £12,648
Then a second payment on account of £4,216 on 31 July 2028. In seven months you pay £16,864 against a year in which you owed £8,432 — and you have simply paid next year early. It only happens once, and it is brutal if nobody told you it was coming.
Worked through at 2026/27 rates from our own calculators, which follow gov.uk guidance checked in July 2026. An example, not advice — your figures will differ.
What we do about it
Six things, every year
A running tax figure
What you owe as it builds, so the set-aside percentage is a fact rather than a guess.
The return, early
Prepared from real records and finished long before January, with the figure and the dates in writing.
Every relief checked
Including the ones from before you started trading, which almost nobody claims.
MTD, handled
Digital records and the quarterly updates from the year it applies to you, without you learning a new system.
The incorporation conversation
Run properly, on your numbers, at the point it is worth having — not as a default answer.
Questions
What people ask us
How much does it cost for a sole trader?
You get a fixed monthly figure in writing after a 30-minute discovery call, and it is driven by four things: how many transactions run through the business, whether you are VAT registered, whether anyone is on payroll, and the state of the records you are handing over. That is why there is no headline number on this page. The fee is fixed monthly, agreed before anything starts, and includes FreeAgent, worth up to £330 a year. There is no hourly charge for asking a question.
Do I actually need an accountant, or can I file it myself?
Plenty of sole traders file their own return perfectly well, and if your income is one stream, your expenses are a short list and you are comfortable with the rules, you probably do not need us yet. Where it stops being sensible is when there is a real decision inside the numbers: whether to incorporate, when to register for VAT, how to treat a vehicle, what to do about a year where profit jumped. Those get expensive to unpick afterwards. The test is whether you can name your taxable profit and your next payment on account without looking.
When do I have to register, and what does it cost if I am late?
By 5 October following the end of the tax year in which your self-employed income passed the £1,000 trading allowance. Registration gets you a Unique Taxpayer Reference, which takes time to arrive, so leaving it to the deadline is a bad idea even if you meet it. Filing late brings an automatic £100 penalty even where no tax is due, then daily penalties and percentage charges as it drags on, plus interest on anything unpaid. Paying late is charged separately from filing late. If you are already behind, tell us how far and we will work out exactly what is outstanding before quoting the catch-up.
Should I be a limited company instead?
Possibly. The tax difference at modest profit levels is far smaller than it used to be once Corporation Tax, dividend rates and the extra admin are counted, and incorporating brings public accounts, a separate bank account, payroll and filings that did not exist before. It usually starts to make sense when profits are consistently above what you need to draw, because retained profit is taxed once rather than as personal income. The right answer needs your actual figures and your plans for the next two years, not a rule of thumb. Read sole trader or limited company, then ask us.
Does Making Tax Digital affect me, and from when?
Yes, on a phased timetable set by your qualifying income — gross income from self-employment and property combined, before expenses, taken from your Self Assessment return. April 2026 for over £50,000, April 2027 for over £30,000 and April 2028 for over £20,000. From your date you send four quarterly updates plus an End of Period Statement and Final Declaration instead of one return. It does not change how much tax you owe, only how often you report. FreeAgent is included in your package and is HMRC-recognised for it, so the practical change is keeping records current through the year rather than in one January panic. See the MTD guide.
What can I actually claim as an expense?
Costs incurred wholly and exclusively for the business. Where something is used privately as well — a phone, a car, a room at home — you claim the business proportion, and you need a defensible basis for the split rather than a round number. Everyday clothing is not allowable even if you only wear it for work; protective gear and genuine uniforms are. For a vehicle you choose between a flat rate per business mile and the business share of actual running costs, and you generally stay with that method for that vehicle. Keep the records digitally as you go — under MTD they have to be digital anyway, and reconstructing a year of receipts in January is where claims get lost.
Can you help if I have not filed for a couple of years?
Yes, and it is more common than people assume. The first job is finding out precisely what is outstanding — which years, which returns, what HMRC has already assessed or charged — because the letters people receive rarely give the full picture. Then we agree an order, usually oldest first, to stop penalties and interest compounding while we work. Where the amount owed is genuinely unaffordable, a Time to Pay arrangement with HMRC is a real option and is far easier to agree before enforcement starts than after. Catch-up work is quoted separately from the monthly fee because it is a one-off project with its own scope.
Is FreeAgent included, and can I keep it if I leave?
It is included at no extra cost while you are a client, worth up to £330 a year against subscribing yourself. If you leave, the licence provided through us stops, but the data is yours: you can take a full export, or move the subscription into your own name and carry on in the same file. We will not hold records hostage over a disputed invoice. Worth being clear about the trade-off — software bundled into a fee is genuinely cheaper than paying separately, but it does tie the licence to the relationship, so ask the same question of any firm offering it.
Accreditations & Partnerships
