Tax doesn't have to be terrifying — once you know which boxes apply to you.

Section 01

Self Assessment (sole traders & directors)

If you are self-employed or have untaxed income, you may need to file a Self Assessment return. A company directorship alone does not automatically create the same filing obligation in every case, so check HMRC’s current guidance. The tax year runs 6 April to 5 April. Online returns are generally due by 31 January following the end of the tax year, which is also a key payment date.

• Register by 5 October after the tax year you started trading
• Income Tax bands: 0% up to £12,570, 20% to £50,270, 40% to £125,140, 45% above
• Compulsory Class 2 National Insurance has been abolished; Class 4 is 6% between £12,570 and £50,270, then 2%, under 2026/27 assumptions
• Payments on account: HMRC asks for 50% of next year's bill in January and July
• Keep records for at least 5 years after the 31 January submission deadline

Section 02

Corporation Tax (limited companies)

Limited companies pay Corporation Tax on profits. The main rate is 25%, with a Small Profits Rate of 19% for profits under £50,000 and marginal relief tapering between £50k and £250k. You must register within 3 months of starting to trade. The CT600 return is due 12 months after your accounting period ends — but the tax itself is due 9 months and 1 day after the period ends, an order that catches almost every new director out.

• Pay first, file second: tax due 9 months + 1 day after year-end; return due 12 months after
• Statutory accounts must also be filed at Companies House within 9 months of year-end
• Directors' loan accounts above £10,000 trigger a benefit-in-kind tax charge
• Research & Development (R&D) tax relief is generous if you're building genuine innovation

Section 03

VAT — the £90,000 threshold

You usually must register for VAT when taxable turnover exceeds £90,000 in a rolling 12-month period, or when you expect to exceed the threshold in the next 30 days. Watch this carefully — it is not based on your tax year. Voluntary registration can suit some businesses, but whether it helps depends on customer type, pricing and reclaimable input VAT.

• Standard rate: 20%. Reduced rate: 5%. Zero-rated: most food, books, children's clothes
• Flat Rate Scheme: simpler accounting, you pay a fixed % of turnover instead of tracking input VAT
• Cash Accounting Scheme: only pay VAT when customers actually pay you
• Once registered, returns are filed quarterly under Making Tax Digital
• Late VAT registration penalties can be 5%–15% of the VAT owed

Section 04

PAYE — if you employ anyone (including yourself)

Pay anyone — including yourself as a company director — and you need to operate PAYE. Register with HMRC up to 4 weeks before the first pay date, run payroll each pay period, and report in Real Time Information (RTI) on or before the day you pay. You'll also handle National Insurance (employee + employer), automatic pension enrolment, and statutory pay (sick, maternity, paternity).

• Employer's National Insurance: 15% on most earnings above the £5,000 secondary threshold for 2026/27
• Auto-enrolment pensions: minimum 3% employer + 5% employee contribution
• P60 to every employee by 31 May after the tax year ends
• P11D for any benefits-in-kind (company cars, private medical, etc.) by 6 July

Section 05

Making Tax Digital (MTD)

MTD requires digital records and compatible software for relevant returns. It is mandatory for VAT-registered businesses within scope and is being phased into Income Tax Self Assessment from April 2026 for qualifying income over £50,000, then from April 2027 for qualifying income over £30,000. Check the latest HMRC criteria and implementation timetable before selecting software.

Section 06

Allowable expenses — what you can actually deduct

Only expenses incurred wholly and exclusively for the business are generally deductible. Common examples include stock, software, professional fees and qualifying business travel. Grey areas need care: home-working costs require a supportable method, personal-vehicle mileage rates have changed, client entertainment is generally not deductible, and ordinary clothing is not deductible unless it meets the relevant rules.

• Trading allowance: first £1,000 of self-employed income is tax-free
• Annual Investment Allowance: 100% relief on most equipment up to £1m
• Use of home: simplified flat rate, or work out a sensible proportion
• Mileage: for tax purposes, 55p for the first 10,000 business miles in the tax year and 25p thereafter for cars; check HMRC’s current rules for your vehicle and circumstances

Section 07

Other taxes you might encounter

Beyond the big four, several more occasionally apply. Business rates if you have commercial premises (your local council bills you; small businesses can get up to 100% relief). Capital Gains Tax if you sell business assets at a profit. Stamp Duty Land Tax if you buy commercial property. Construction Industry Scheme (CIS) deductions if you operate in construction. Import VAT and customs duty if you ship goods from outside the UK.