6th April          HMRC issue of Self Assessment Returns

31st October  Deadline for Submission of Paper Returns

31st January   Final Deadline for returns to be filed online

31st January   Final Deadline for Paying the tax you owe for the previous year

5th October   Registering Self Employment with HMRC for the tax year  you started trading. For example, if you need to complete a tax 

                        return for the tax year 6 April 2025 – 5 April 2026, you must register by 5 October 2025.

SOLE TRADER

A Sole Trader have full ownership of their business. There will be no separate legal identity from that of  the owner which means a Sole Trader will take full liability.  It is vital that Sole Traders have professional indemnity or public liability insurance. 

EARNINGS

A Sole Trader keep all of their earnings after tax, which is paid via the self-assessment system. This means that your earnings are entirely dependant on your performance that year — so while there’s the potential for large profits, there’s also the risk that you won’t make enough money to earn a decent salary.

TAX

Sole Traders do not pay corporation tax. Their tax and National Insurance is paid via the self-assessment system.

 

LIMITED COMPANY

A Limited Liability company is one which is legally distinct from the identity of the owner. It has a unique company identity, which must be registered (for a small fee) with Companies House. There may be more than one owner or director, and they will have limited liability — meaning their personal finances won’t be affected should the business struggle financially.

EARNINGS

The owners of a limited company draw their earnings in the form of a salary, which is taxed at standard PAYE rates. They can also draw their earnings in the form of bonuses and dividends, subject to overall performance. The tax-free allowance for 2025/2026 for dividends £500.

TAX

Limited Companies must pay Corporation Tax*. 

*Corporation Tax

Corporation Tax in the UK is a tax that limited companies need to pay on their profits. There is no personal allowance for Corporation Tax so as soon as the business starts making a profit, it needs to start paying Corporation tax.  A Limited Company pays tax on trading profits and chargeable gains (company assets such as land and property, equipment and machinery and company shares). 

From April 2023 onwards, the main rate of Corporation Tax will rise from 19% to 25%. Although the current 19% rate will still apply if your profits are £50,000 or less, your company will pay more tax on profits above this level. This is done in line with your company's financial statements and annual accounts.  

*Important dates*- You need to pay Corporation tax before you file your company's tax return and the date depends on your company's Corporation tax accounting period is 31st March. The deadline to pay your Corporation Tax bill is nine months and one day after the end of your accounting period for your previous financial year, so if your accounting period ends on 31 March, your Corporation Tax deadline is 1st January.

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Making Tax Digital for Income Tax Self Assessment for sole traders and landlords

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Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requires businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter using compatible software.

For individuals, MTD for ITSA will be introduced in two phases:

• from April 2026, for those with qualifying income over £50,000

• from April 2027, for those with qualifying income over £30,000

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Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC.  

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You, or your agent if you have one, will need to use software that works with Making Tax Digital for Income Tax to: 

• create, store and correct digital records of your self-employment and property income and expenses  

• send your quarterly updates to HMRC  

• submit your tax return by 31 January the following year