Start planning now for your next tax bill

Last Updated on 8 March 2024

There are two stages to paying income tax when you’re a sole trader:

1. Tell HMRC about your turnover and expenses in a self-assessment tax return
2. Pay any tax you owe

In between these you will receive a tax bill from HMRC.

You can submit your self-assessment tax return as soon as a tax year finishes on 5th April.

You have until the deadline which is the following 31st January. But it’s a good idea to do it as soon as possible.

It means you won’t forget, but it also means you know what tax will be owing way in advance of having to pay it.

And doing your tax return earlier doesn’t mean you pay tax any earlier.

Paying tax also happens by 31st January, as you can see in this pretty colour-coordinated picture of a tax timeline:

Once you’re up and running as a sole trader for a couple of years, and your tax bill increases, you may be asked to pay ‘on account’ for half of the current tax year as well, and then again at the end of July.

You can read more about payment on account in an earlier blog post >

So do you know how much tax you will owe for last year yet? If so, are you sure you have enough set aside to pay it in January?

Writing this in September feels strange. Summer is still with us (just) and January seems a long way away.

But you don’t want to get to December and find the tax bill is a nasty surprise. Just check you have enough funds now, or plan how to put a bit aside every month between now and the new year.

Posted on 31 August 2023