How does self assessment work for freelancers? It’s one of those things everyone assumes you already know, which is exactly why so many people end up Googling it alone at an inconvenient hour. If that’s you, you’re in the right place.

Do Freelancers Actually Need to Do Self Assessment?

Yes, almost certainly. If you earned more than £1,000 from self-employed work in a tax year, you’re required to register for Self Assessment with HMRC and file a tax return. That £1,000 figure is called the trading allowance, and it’s a low bar.

This applies whether you freelance full-time or alongside a regular employed job. If you’re also an employee, your employer handles your PAYE tax, but any self-employed income on top of that still needs to go through a Self Assessment return. Many freelancers don’t realise this until their second or third year, and by then the paperwork has quietly stacked up.

The Deadlines That Actually Matter

The UK tax year runs from 6 April to 5 April. Once a tax year ends, you have until 31 January the following year to file your return online and pay any tax you owe. So for the 2025/26 tax year, your deadline is 31 January 2027. If you want to file a paper return instead, that deadline is much earlier at 31 October.

Missing the filing deadline has real consequences. HMRC’s late filing penalties start at £100 the day after the deadline, then £10 per day for up to 90 days, capped at £900. After six months, a further penalty of 5% of the tax due or £300 (whichever is greater) applies. After twelve months, that same charge hits again. Late payment also attracts interest and a 5% surcharge at 30 days, six months, and twelve months. These penalties add up quickly, and they’re hard to appeal unless there’s a genuinely exceptional reason.

What Expenses Can Freelancers Claim?

This is where most freelancers either leave money on the table or accidentally overclaim. HMRC’s rule on allowable expenses is that costs must be wholly and exclusively for business purposes. That covers things like software subscriptions, professional insurance, advertising, home office costs, travel to client sites, and relevant training. If you use something for both personal and business reasons, like your mobile phone, you can only claim the business portion.

For equipment and larger purchases, you can claim capital allowances rather than the full cost in one go, though the Annual Investment Allowance often lets smaller businesses deduct the full amount in the year of purchase. HMRC also allows simplified flat rates for working from home and vehicle mileage, which makes things easier if you don’t want to track every receipt. Keeping clear records throughout the year is what makes all of this straightforward at return time, and it’s also what protects you if HMRC ever has a question.

Making Tax Digital: What’s Changing and When

If you’ve heard the phrase Making Tax Digital (MTD) and wondered whether it affects you, here’s the short version. MTD for Income Tax is a phased change that requires some self-employed people to use compatible software and submit quarterly updates to HMRC, instead of one annual return. According to GOV.UK, from April 2026, sole traders with qualifying income over £50,000 in 2024/25 must comply. From April 2027, that threshold drops to £30,000, and from April 2028 it drops again to £20,000.

HMRC says it will write to affected taxpayers, but you’re responsible for checking whether the rules apply to you, even if no letter arrives. If your income is approaching any of those thresholds, it’s worth getting set up on compliant software sooner rather than later. I use QuickBooks, FreeAgent, Xero and Sage with my clients, so if you’re unsure which one fits your situation, that’s something I can help with on a free call.