End of tax year checklist for sole traders

1. Confirm your income and expenses are recorded

Before the year closes, make sure every transaction from 6 April 2025 to 5 April 2026 is captured:

• All invoices raised and income received — including any late payments, cash, or ad hoc work
• All business expenses — check your bank statements for anything you may have missed
• Any income from other sources — bank interest, dividends, rental income, or employment

This is the last tax year where paper records or non-MTD digital methods are acceptable for those moving to MTD. From 6 April, records must be digital and in compliant software.

2. Claim all allowable expenses

Go through your expenses carefully before the year ends. Common ones that sole traders miss:

• Home office: £6/week flat rate (up to £312 for the year) or actual costs if higher
• Mileage: 45p per mile for the first 10,000 business miles — did you keep a mileage log?
• Professional subscriptions: industry memberships, trade body fees
• Equipment: computers, tools, office furniture bought in 2025/26 — deduct as an expense if you're on cash basis (most sole traders), or claim capital allowances if you're on accruals basis
• Software: accounting software, design tools, project management apps
• Training: courses that update existing skills

See our complete expenses guide for everything you can claim.

3. Use your tax-free allowances

Several allowances reset each 5 April. Don't leave any on the table:

• Personal allowance: £12,570 — if your profits are below this, you'll pay no Income Tax
• Trading allowance: £1,000 — if your total gross self-employment income is under this, no tax is due and no registration is needed
• Marriage allowance: If your spouse or civil partner earns under £12,570, they can transfer £1,260 of their allowance to you, saving up to £252 in tax
• Pension contributions: Contributions made before 5 April reduce your 2025/26 taxable income. The annual pension contribution limit is £60,000 (or 100% of your earnings, whichever is lower)

4. ISA contributions

The annual ISA allowance is £20,000, and it resets on 6 April — any unused allowance is lost. If you have spare savings you haven't invested in an ISA this year, today is your last chance.

ISAs aren't a business matter, but they're one of the most tax-efficient savings vehicles available — interest and returns are completely tax-free. Many sole traders overlook this while focused on their business finances.

5. Check your National Insurance position

For 2025/26:

• Class 2 NI: £3.45/week if your profits exceed £6,725 — collected through Self Assessment. If profits are below this, you won't owe Class 2 NI (but can pay voluntarily to protect State Pension entitlement)
• Class 4 NI: 6% on profits between £12,570 and £50,270; 2% above
• State Pension check: You can check your NI record and State Pension forecast on gov.uk to ensure you have enough qualifying years

6. Prepare for MTD (if earning over £50,000)

If your 2025/26 gross income (before expenses) exceeded £50,000, Making Tax Digital applies to you from 6 April 2026. Before the new year begins:

1. Sign up for MTD for Income Tax through HMRC or your software
2. Choose your MTD software — apps like Bart are built for sole traders
3. Connect your bank account if using open banking
4. Note your first quarterly deadline — 5 August 2026 for Quarter 1 (6 April–5 July)

7. Set aside tax for your January bill

If you haven't been setting aside money for your tax bill throughout the year, do a rough calculation now. A simple guide:

• If your profits are between £12,570 and £50,270, set aside approximately 25–30% of profits
• If profits are above £50,270, set aside more — up to 45% for higher and additional rate taxpayers

Your Self Assessment return for 2025/26 is due by 31 January 2027, and tax is payable by the same date. Payment on account for 2026/27 may also be due then.

Self Assessment reminder

File your 2025/26 Self Assessment return by 31 January 2027. If you're moving to MTD from 2026/27 onwards (income over £50,000), this will be your last traditional Self Assessment return — from next year, it's replaced by the Final Declaration under MTD.

Frequently asked questions