Tax & expense guides for UK sole traders
Plain-English articles on HMRC rules, Making Tax Digital, allowable expenses, and Self Assessment. Click any topic to read more.
From 6 April 2026, sole traders and landlords earning over £50,000 must keep digital records and submit quarterly updates to HMRC. This is the biggest change to self-employment tax in a generation.
- Who’s affected: Sole traders and landlords with qualifying income over £50,000 (from self-employment + property). PAYE income, dividends, and savings don’t count.
- What changes: 5 submissions per year instead of 1 — four quarterly updates plus your annual tax return.
- Software required: You must use HMRC-recognised software to keep digital records. Spreadsheets only work with bridging software.
- Penalty relief: No penalty points for late quarterly updates in the first 12 months (soft landing period).
- Coming next: £30,000 threshold from April 2027, £20,000 from April 2028.
The most common question sole traders ask — and the answer depends on your profit after expenses. Use our free calculator to get your exact breakdown.
- Income tax: Personal Allowance £12,570, then 20% basic / 40% higher / 45% additional rate
- National Insurance: Class 2 (£3.45/week) + Class 4 (6% on £12,570–£50,270, 2% above)
- Personal Allowance taper: Reduces by £1 for every £2 earned over £100,000
- Reduce your bill: Every £1 of allowable expenses saves you 20–40p in tax
Claiming every legitimate expense is the single biggest way to reduce your tax bill as a sole trader. Many people miss hundreds of pounds because they don’t know what qualifies.
- Office & equipment: Laptops, phones, software, stationery, tools
- Working from home: Flat rate £10–£26/month or proportional method
- Travel & vehicles: 45p/mile for first 10,000 miles, 25p thereafter (or actual costs)
- Professional fees: Accountant, insurance, trade memberships
- Stock & materials: Raw materials, goods for resale, packaging
Not all receipt scanners are built for UK sole traders. We tested 7 apps on VAT extraction, HMRC categories, mileage tracking, and export quality.
- PocketReceipt: Free, UK-focused, SA103F mapping, mileage built-in, accountant dashboard
- Dext: Powerful but needs an accounting platform on top (£24+/month)
- FreeAgent: Great all-in-one but £15/month (free with NatWest)
- Xero: Full accounting suite, receipt scanning as one feature
- 1tap / SparkReceipt: Cheap basics but no UK tax features
If you use your personal vehicle for business, you can claim a mileage deduction on your tax return. Most sole traders leave money on the table because they don’t log their journeys.
- Cars & vans: 45p/mile for first 10,000 miles, 25p/mile after that
- Motorcycles: 24p/mile flat rate
- Bicycles: 20p/mile flat rate
- Passengers: Extra 5p/mile per business passenger (cars only)
- Example: 8,000 business miles = £3,600 deduction = £720 tax saved at 20%
Use our free mileage calculator for an instant calculation.
Read the full mileage guide →Missing a deadline costs money. Here are every date you need to know for the 2026/27 tax year, including the new MTD quarterly submission dates.
- 5 October 2026: Register for Self Assessment (if new)
- 31 October 2026: Paper tax return deadline
- 31 January 2027: Online tax return + payment deadline
- MTD quarterly: 5 Aug, 5 Nov, 5 Feb, 5 May (if applicable)
- Late filing penalty: £100 immediately, then £10/day after 3 months