Self-employed? Your tax returnshould not take over your evenings.
We look after Self Assessment, Making Tax Digital and the bookkeeping behind it for sole traders across London, and we tell you plainly whether a limited company would actually save you money.
What makes your finances different.
One pot of money
Business income, personal spending and tax all flow through the same accounts. Working out what is really profit, and what HMRC will want in January, is the recurring headache.
Quarterly reporting has arrived
Making Tax Digital for Income Tax applies from April 2026 to sole traders with qualifying income over £50,000, from April 2027 over £30,000, and from April 2028 over £20,000. It means digital records and four quarterly updates on top of the annual return.
Expenses are a grey area
Home office costs, vehicle use, phone bills and clothing all have specific rules. Claim too little and you overpay; claim the wrong things and HMRC can go back years.
The January squeeze
The balancing payment and the first payment on account fall on the same day. Without a plan, the bill arrives at the worst time of year.
What we do for you.
- Register you for Self Assessment and get your UTR if you are new to trading
- Set up simple digital records in Xero or QuickBooks that meet Making Tax Digital rules
- Prepare and file your quarterly MTD updates and the year-end return
- Work out which expenses you can claim, including simplified expenses where they help
- Calculate your tax and Class 4 National Insurance and tell you what to set aside each month
- Check whether payments on account can be reduced if income has fallen
- Run the numbers on going limited and handle the switch if it makes sense
- Deal with HMRC letters and queries on your behalf as your agent
The tax rules that matter here.
- Income tax and Class 4 NI
- After the £12,570 personal allowance, profit is taxed at 20%, 40% and 45%. Class 4 National Insurance is 6% between £12,570 and £50,270 and 2% above. Class 2 is no longer compulsory for profits over the small profits threshold; it is treated as paid.
- Trading allowance
- The first £1,000 of trading income is tax-free and does not need reporting. Above that you can deduct either the £1,000 allowance or your actual expenses, whichever is better.
- Making Tax Digital for Income Tax
- Mandatory from April 2026 for qualifying income over £50,000, April 2027 over £30,000 and April 2028 over £20,000. Qualifying income is gross trading and property income combined, not profit.
- Simplified expenses
- Flat rates can be used for business mileage (55p per mile for the first 10,000 miles in 2026/27, 25p after) and for working from home (£10 to £26 a month depending on hours), instead of tracking actual costs.
- Cash basis by default
- Since April 2024 the cash basis is the default method for sole traders with no turnover limit. You record income when received and expenses when paid, which is simpler and usually defers tax.
Rules and rates are those in force for 2026/27 at the time of writing. Check your own position before acting.
Run your own numbers first.
- VAT calculator
Add VAT to a net price, or strip it out of a gross figure.
- Self-employed tax calculator
Income tax and National Insurance on sole trader profits.
- Sole trader vs limited company calculator
When does going limited actually save you money? Find your break-even point.
Worth asking.
Not legally, but most self-employed people with income above the trading allowance benefit from one. An accountant makes sure you claim everything allowable, meets the Making Tax Digital quarterly deadlines, and warns you before a tax bill or threshold becomes a problem. The fee is itself a deductible expense.
From April 2026 if your combined gross self-employment and property income was over £50,000 in the 2024/25 tax year, from April 2027 if over £30,000, and from April 2028 if over £20,000. You will need digital records and software that sends quarterly updates to HMRC.
Costs incurred wholly and exclusively for the business: stock, materials, travel, a proportion of phone and home costs, professional fees, insurance, software and equipment. Entertaining clients, ordinary clothing and fines are not allowable. Mixed-use costs are apportioned.
On 2026/27 rates there is no tax saving if you take all the profit out. A company starts to come out ahead at around £55,000 to £64,000 of profit when you draw £30,000 to £50,270 a year and leave the rest in the business. Limited liability or retaining profit for growth can also justify it. Our sole trader vs limited company calculator shows the break-even point for your figures.
Advance payments towards next year's tax, each half of this year's bill, due on 31 January and 31 July. They apply once your Self Assessment bill exceeds £1,000 and less than 80% of your tax is deducted at source. If income has dropped we can apply to reduce them.
Yes. We regularly bring sole traders up to date with one or more missed years, calculate the penalties and interest due, and where there is a reasonable excuse we appeal them. The sooner it is done, the smaller the bill.
The services involved
- Self AssessmentPersonal tax return support for individuals, directors and sole traders.
- Bookkeeping & Cloud AccountingRegular support with records, reconciliation and keeping the books organised.
- VAT ReturnsReview and preparation of VAT returns, based on the agreed service and available records.
- Tax Advice & PlanningPractical tax planning for directors, sole traders and landlords, and an HMRC agent on your side all year.
- Set Up a Limited Company: Business Startup & Company FormationSetting up a new business properly: structure, company formation, registrations, banking and software.
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