Your first tax return as a sole trader is the one that surprises people: the deadlines are further away than they look, and the first payment is bigger than one year's tax. This guide walks through it for someone who started trading in the 2026/27 tax year (6 April 2026 to 5 April 2027).
Written and reviewed by James Whitfield · Updated October 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
If you started trading in 2026/27, register for Self Assessment by 5 October 2027, file your first return online by 31 January 2028 and pay by the same date.12 On 31 January 2028 you pay the whole 2026/27 bill plus a first payment on account for 2027/28 of half that bill, unless the bill is under £1,000.3 On £30,000 profit that is £4,531.80 of tax and Class 4 NI, so £6,797.70 is due on 31 January 2028 and £2,265.90 on 31 July 2028.
Related: Payments on account · Register as a sole trader · Tax set-aside calculator
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Everything hangs off the tax year in which you started. If your first trading day was between 6 April 2026 and 5 April 2027, your first return covers the 2026/27 tax year and the dates below apply.12
| Tax year your business started | 2026/27 |
| Register for Self Assessment (and get your UTR) | 5 October 2027 |
| Paper tax return deadline | 31 October 2027 |
| Online tax return deadline | 31 January 2028 |
| Pay 2026/27 bill + first payment on account for 2027/28 | 31 January 2028 |
| Second payment on account for 2027/28 | 31 July 2028 |
Sole traders pay income tax and Class 4 National Insurance on profit (income minus allowable expenses), not on turnover. For 2026/27 the first £12,570 is tax-free; profit up to £50,270 is taxed at 20% plus 6% Class 4 NI, and profit above that at 40% plus 2%. Class 2 NI is no longer compulsory.
Here is a sole trader who started on 1 June 2026 and made £30,000 profit by 5 April 2027, living in England with no other income.
| Profit for 2026/27 | £30,000.00 |
| Income tax: 20% of (£30,000 − £12,570) | £3,486.00 |
| Class 4 NI: 6% of (£30,000 − £12,570) | £1,045.80 |
| 2026/27 bill | £4,531.80 |
| First payment on account for 2027/28 (50%) | £2,265.90 |
| Due 31 January 2028 | £6,797.70 |
| Second payment on account, due 31 July 2028 | £2,265.90 |
That first January payment is 150% of one year's tax. It is the single biggest reason new sole traders end up on a payment plan. At this profit level, setting aside about 23% of profit from the first invoice covers the whole first January payment.
Gather these before you sit down to file: your UTR and Government Gateway login; total income from the business for the year; your allowable expenses by category (or the £1,000 trading allowance if your costs were lower); any employment income from a P60 or P45; and any other income such as savings interest or rent.
If you started part-way through the year, choose your accounting date. Most new sole traders use 5 April or 31 March so the accounts match the tax year and no adjustments are needed. Keep your records for at least 5 years after the 31 January filing deadline.
1. Sign in to your HMRC online account with the Government Gateway details you set up when you registered.
2. Choose the self-employment pages and enter your business start date, turnover and expenses. Turnover under £90,000 can go in as a single expenses total.
3. Add any other income: your salary from a P60 if you were employed in the same year, bank interest, or rent.
4. Check the calculation HMRC shows before you submit. It should match your own estimate within a few pounds; if it is much higher, look for a missing expense or the wrong start date.
5. Submit and note the reference. Pay the January amount by bank transfer, debit card or through your online account, or set up a budget payment plan to pay monthly in advance.
You do not have to make payments on account if your bill is under £1,000, or if more than 80% of your total tax was already deducted at source, for example because you also have a salaried job.3
If you expect your second year's profit to be lower, you can ask HMRC to reduce the payments on account through your online account or form SA303. Reduce them only on a real estimate: if you reduce them too far, HMRC charges interest on the shortfall.
Filing late costs £100 straight away, then £10 a day after 3 months (up to £900), then 5% of the tax due or £300, whichever is more, at 6 and again at 12 months.4 Paying late adds interest from the due date, plus late payment penalties on the balancing payment.
Registering late can also bring a penalty if tax is unpaid as a result. If you are late registering, do it as soon as you notice; penalties are lower when you tell HMRC before they find out.
If you started trading between 6 April 2026 and 5 April 2027, your first return covers 2026/27 and must be filed online by 31 January 2028 (31 October 2027 on paper). Register for Self Assessment by 5 October 2027.
With your first tax bill on 31 January after the end of your first tax year. For a 2026/27 starter that is 31 January 2028, alongside the 2026/27 bill. The second payment on account is due on 31 July 2028.
Because the first 31 January payment covers the whole first year's tax and Class 4 NI plus half of it again as a payment on account for the next year. On £30,000 profit that is £6,797.70 in one payment.
Not if your total self-employed income (before expenses) was £1,000 or less and you have no other reason to file. The trading allowance covers it.
No. Compulsory Class 2 ended from April 2024. You pay Class 4 NI at 6% on profit between £12,570 and £50,270. You can pay voluntary Class 2 at £3.65 a week if your profit is low and you want to protect your State Pension record.
The rates, thresholds and rules in this guide are drawn from the official HMRC and GOV.UK sources below, using the confirmed 2026/27 figures. Each link opens the relevant official page in a new tab.
The sole trader tax calculator turns this guidance into a concrete monthly take-home and tax reserve estimate, based on 2026/27 HMRC rates. Enter taxable profit — not turnover.