☕ Accounting Espresso #4 - Self-Employed in the UK? Here’s How to Prepare Early for 2025–2026

The end of the tax year may feel far away — but if you’re a sole trader in the UK, the best time to prepare for your Self Assessment is now. Planning early means less stress, fewer mistakes, and no last-minute panic when January comes around.

Here’s how to start strong before the new financial year even begins.

💡 1. Keep your records up to date

You can’t plan what you don’t track.Make sure your income and expenses are recorded regularly — ideally every month. Keep receipts, invoices, and bank statements organised (digital is fine, as long as they’re accessible).

👉 Tools like QuickBooks, Xero, or FreeAgent can save you hours and help you spot errors before HMRC does.

💸 2. Set aside money for taxes now

Many sole traders fall into the trap of spending what’s in their account, forgetting part of that money belongs to HMRC.

Rule of thumb:

• Save 20–25% of your profits for Income Tax

• Add another 10% buffer if you’ll owe National Insurance

• And if you make more than £1,000 profit, remember Payments on Account (January and July instalments).

Having a separate savings account for your tax pot is one of the simplest ways to stay on top of your cash flow.

🧾 3. Review your allowable expenses

Before the new year begins, make sure you’re claiming everything you’re entitled to.

Typical allowable expenses for sole traders include:

• Business travel (not commuting)

• Marketing and website costs

• Equipment and software

• Utilities if you work from home

• Professional services like your accountant

If you’re unsure whether something counts, HMRC’s official guidance explains the full list of deductible costs:🔗 Allowable expenses for the self-employed

🗂️ Plan for upcoming changes

Every April, HMRC updates thresholds, tax bands, and allowances.For 2025–26, check if your income level affects your National Insurance or Personal Allowance, and stay informed about any new basis period rules if you’re changing accounting dates.

It’s also a good time to book a quick catch-up with your accountant to check whether switching to a limited company could be beneficial for the coming year.

✅ Final tip: prepare your Self Assessment before Christmas

It may sound early, but filing before the holidays gives you peace of mind — and if you’re due a tax refund, you’ll get it sooner.

Don’t wait for January panic. Start preparing now and make your 2025–26 Self Assessment feel like just another tick on your to-do list.

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