Self Assessment tax guide for tradespeople: what you need to know

Self Assessment is one of the most stressful parts of running a trade business — not because it is complicated in principle, but because the consequences of getting it wrong are expensive and the deadlines are fixed. A £100 late filing penalty becomes £900 after six months and several thousand pounds after twelve. Most tradespeople who struggle with Self Assessment are not doing anything wrong — they just do not have a clear picture of what they owe, what they can claim, and when things need to happen.

This guide covers who needs to file, the key deadlines, what you can and cannot claim, how the Construction Industry Scheme (CIS) interacts with your tax bill, and what Making Tax Digital means for income tax from April 2026.

Who needs to file Self Assessment

If any of the following apply to you, you need to file a Self Assessment tax return:

• Sole traders earning more than £1,000 in self-employed income in the tax year. This applies whether you have other PAYE employment or not — if you are earning anything from self-employed trade work, you need to declare it.
• CIS subcontractors — even if a contractor is withholding tax at source before paying you, you still need to file a Self Assessment return to reconcile what has been deducted against what you actually owe. Most CIS subcontractors are owed a refund.
• Limited company directors who draw a salary above the personal allowance and/or take dividends. The company itself files Corporation Tax separately, but you as a director must file Self Assessment for your personal income from the company.
• Anyone earning over £100,000 from any source — HMRC's tapered personal allowance means additional tax is owed and must be declared.

Key deadlines you must not miss

The UK tax year runs from 6 April to 5 April the following year. For the 2025/26 tax year (ending 5 April 2026), the deadlines are:

• 5 October 2026 — register for Self Assessment if this is your first year. You cannot file a return without registering first, and leaving this late makes it almost impossible to file by the deadline.
• 31 October 2026 — deadline for paper Self Assessment returns. Almost nobody files on paper now, but if you do, this is your date.
• 31 January 2027 — deadline for online Self Assessment returns and for paying the tax you owe for 2025/26. This is also when the first “payment on account” for 2026/27 is due, which catches many tradespeople off guard.
• 31 July 2027 — second payment on account for 2026/27. Each payment on account is 50% of the previous year's tax bill, paid in advance towards the following year.

The automatic penalty for filing your return late is £100, even if you owe nothing. After three months, further daily penalties apply. After six months, an additional 5% of the tax owed is charged. Do not miss the 31 January deadline.

What you can claim as business expenses

Allowable expenses reduce your taxable profit — so every legitimate expense claim directly reduces your tax bill. For tradespeople, the deductible expenses typically include:

• Van and vehicle costs — fuel, insurance, road tax, servicing, MOT, and repairs. If you use the same vehicle for personal trips, you can only claim the business-use proportion. Many sole traders find it simpler to claim the HMRC flat-rate mileage allowance (45p per mile for the first 10,000 miles, 25p thereafter) instead of actual costs.
• Tools and equipment — hand tools, power tools, testing equipment, and specialist kit. Small items are claimed as expenses in full; larger items (vans, plant) may be claimed through the Annual Investment Allowance.
• PPE and workwear — safety boots, hi-vis, gloves, overalls. Clothing that is exclusively for work and unsuitable for everyday wear is deductible. Ordinary clothing, even if worn only on site, is not.
• Phone and broadband — the business-use proportion of your mobile contract and any broadband you use for work. If your phone is entirely for business, claim 100%. If it is mixed use, claim a reasonable proportion.
• Training and accreditations — courses, certifications, and professional development related to your trade. Gas Safe registration fees, NICEIC fees, and similar are deductible.
• Home office — if you do administrative work from home (invoicing, quoting, bookkeeping), you can claim a proportion of your household running costs, or use the HMRC flat rate of £6 per week.
• Accountant and software fees — the cost of your accountant, bookkeeping software, and your Trade2Base subscription are all allowable business expenses.
• Insurance — public liability insurance, tool insurance, and professional indemnity are all deductible.
• Marketing — Google Ads spend, website costs, printed flyers, and direct mail campaigns are allowable expenses.

What you cannot claim

Some expenses catch tradespeople out because they seem reasonable but are specifically disallowed by HMRC:

• Fines and penalties — parking fines, speeding fines, and HMRC penalties are not deductible, even if incurred while working.
• Client entertaining — taking a client out for dinner or drinks is not an allowable expense. Staff entertaining (such as a Christmas meal for your team) follows different rules.
• Everyday clothing — jeans, boots you also wear casually, or any item of clothing that could be worn outside of work is not deductible, even if you only actually wear it on site.
• Personal expenses mixed with business — fuel for a family holiday cannot be claimed even if you also use the van for work. Only the business-use proportion of mixed expenses is allowable.

How CIS deductions interact with your tax bill

If you work as a subcontractor under the Construction Industry Scheme, your contractor is required to deduct tax at source before paying you. The standard CIS deduction rate is 20% for registered subcontractors and 30% for unregistered ones. These deductions are paid to HMRC on your behalf and count towards your income tax and National Insurance liability for the year.

When you file your Self Assessment return, your CIS deductions are offset against your actual tax bill. Because the deduction rate (20%) often exceeds what a sole trader actually owes after accounting for business expenses and the personal allowance, most CIS subcontractors receive a tax refund after filing. This refund is not automatic — you only get it by filing your return. Many CIS subcontractors who do not file are effectively leaving thousands of pounds of their own money with HMRC every year.

You can apply for gross payment status (no deduction at source) once your business has been trading for 12 months and meets HMRC's turnover and compliance tests. Many established CIS subcontractors find this worth pursuing for the cash flow benefit.

Making Tax Digital for Income Tax: April 2026 rollout

Making Tax Digital for Income Tax (MTD for ITSA) is HMRC's biggest change to Self Assessment in a generation. From April 2026, sole traders and landlords with qualifying income over £50,000 are required to keep digital records and submit quarterly updates to HMRC using MTD-compatible software, instead of a single annual return.

The threshold drops to £30,000 from April 2027 and is expected to drop further. If your trade business turns over more than £50,000 (this means your gross income, not your profit), you need to be using MTD-compatible software now. Quarterly submissions replace the annual return — you submit income and expense data every three months, then a final end-of-year declaration in January.

The practical implication is that leaving your bookkeeping to a January scramble is no longer possible for higher-earning tradespeople. You need a system that captures income and expenses throughout the year. If your accountant has not raised this with you yet, raise it with them.

Using Trade2Base to prepare for your accountant

The most time-consuming part of Self Assessment for most tradespeople is not the actual filing — it is pulling together a year's worth of income and expense data into a format the accountant can use. Trade2Base makes this straightforward. Every invoice you raise is recorded automatically. Every job is linked to a customer, a value, and a date. At year end, you can export a clean income summary directly from Trade2Base and hand it to your accountant alongside your expense receipts.

For tradespeople using Trade2Base alongside accounting software like Xero, QuickBooks or FreeAgent, the integration means income data flows automatically — no manual data entry, no spreadsheets, no missing invoices. The result is a tax return that is faster to prepare, less likely to contain errors, and more likely to surface every legitimate deduction you are entitled to.

Self Assessment does not have to be stressful. With the right records kept throughout the year and a clear understanding of what you can claim, most tradespeople find that their tax bill is lower than they expected — and their refund larger.