Accountant for a sole trader

What HMRC needs from you

Register for Self Assessment

You can start trading straight away. You must register for Self Assessment as a sole trader if you earn more than £1,000 in a tax year (6 April to 5 April).¹ If you have not sent a tax return before, tell HMRC by 5 October after the end of the tax year you need to report. For the tax year that ended on 5 April 2026, that was 5 October 2026.²

Send a tax return and pay the tax

For the 2025 to 2026 tax year, a paper return must reach HMRC by 31 October 2026 and an online return by 31 January 2027. The tax you owe is due by 31 January 2027. If you make payments on account, there is a second payment date of 31 July.²

Keep records

You must keep records of your business income and expenses for your tax return, and records of your personal income.³ From the 2024 to 2025 tax year, cash basis is the default way of accounting: you record money when it comes in or goes out. You can opt out and use traditional accounting, where you record income and costs by the date you invoiced or were billed.³ Keep your records for at least 5 years after the 31 January submission deadline of the tax year they relate to.⁴

Making Tax Digital for Income Tax

Making Tax Digital for Income Tax applies to sole traders and landlords registered for Self Assessment whose qualifying income from self-employment and property is over a threshold. Some people are exempt.⁵

HMRC checks your tax return each year and writes to you if you need to start. GOV.UK says that if you do not get a letter, it is still your responsibility to check.⁵ You will need software that works with it, or an agent who will act for you. If you are getting close to a threshold, this is a natural point to decide whether you want help.

When paying for help may be worth it

This is our judgement, not a rule. Some sole traders find help worth paying for when:

• Making Tax Digital for Income Tax applies to them, or soon will.
• They have more than one source of income, such as self-employment plus rental income or a job.
• They are near the VAT threshold, or registered for VAT.
• They take on staff and need payroll.
• They are unsure what counts as a business expense, or have had a letter from HMRC they do not understand.
• Their profit is growing and they want to know whether a limited company would make sense.
• The time spent on paperwork would be better spent on paid work.

If the problem is keeping records up to date rather than the tax itself, a bookkeeper may be enough. See Accountant or bookkeeper?

What an accountant does for a sole trader

Work a firm may take on, depending on what you agree:

• Prepare and file your Self Assessment tax return.
• Work out your profit and tell you how much tax to set aside.
• Set up software and keep your Making Tax Digital updates going.
• Deal with HMRC for you. Once you authorise an agent, HMRC sends your Self Assessment letters to them, except tax bills and refunds.⁶

For prices, see How accountancy fees work. Ask for the fee in writing and what it covers before you agree.