Self-assessment for tradespeople: deadlines, allowable expenses, the £1,000 trap

A joiner I know went self-employed in the spring, had a decent first year, and got a tax bill in January he hadn't put a penny aside for. Not because he'd done anything wrong. He'd just assumed the number would be roughly what he owed. It wasn't. HMRC wanted the year he'd finished, plus half of it again on account for the year he was in the middle of. He paid it, but it came off the van fund and it hurt.

That's the bit nobody explains on site. Not the form. The form takes an hour if your records are straight. It's the timing, and the fact that the January bill is bigger than the tax you actually earned.

Here's the whole thing in plain English: the dates, what you can claim, the two different £1,000 thresholds that catch trades out, and a full worked example on a plumbing book of £62,000.

The dates that actually matter

The UK tax year runs 6 April to 5 April. Everything hangs off that.

For the 2025/26 tax year, which ended on 5 April 2026, the dates are:

• 5 October 2026: deadline to register for self assessment if 2025/26 was your first year self-employed. Register at gov.uk. You get a UTR in the post, which takes a couple of weeks, so don't leave it to the last day.
• 31 October 2026: paper return deadline. Almost nobody uses paper now.
• 31 January 2027: online return deadline, and the day the tax is due. Also the day your first payment on account is due.
• 31 July 2027: second payment on account due.

Miss 31 January and you get an automatic £100 penalty. Not a percentage, a flat £100, and it applies even if you owe no tax at all. Three months late and it becomes £10 a day for up to 90 days, so £900 on top. Six months late is another 5% of the tax due or £300, whichever is higher, and the same again at twelve months.

Late payment is penalised separately from late filing, at 30 days, 6 months and 12 months, with daily interest running the whole time. HMRC's late payment interest rate sits a few points above the Bank of England base rate, so check the current rate on gov.uk rather than assuming.

The £1,000 trap, both versions

Version one: the trading allowance

You get a £1,000 trading allowance. Earn less than that from self-employment in a tax year and you don't need to register or declare it.

The trap is that the £1,000 is measured on turnover, not profit. Plenty of lads doing weekend work assume it means what they cleared. It doesn't.

Say you did four weekend jobs on the side, invoiced £9,000, and £8,500 of that went straight back out on materials and hire. You cleared £500. But your turnover was £9,000, so you're well over the threshold and you need to be registered and filing.

Second half of the trap: if you do use the trading allowance, you cannot claim a single expense. It's the £1,000 or your real costs, never both. That makes it useful for a bit of low-cost labour-only work and useless for anything where you buy materials.

Version two: payments on account

This is the one that empties the van fund.

If your self assessment bill comes to more than £1,000, and less than 80% of your tax was collected at source, HMRC asks for payments on account towards the following year. Each payment is half of this year's bill.

So on your first proper January, you pay:

• The full balancing payment for the year just gone
• Plus 50% of that same figure as your first payment on account

Then another 50% on 31 July. In total you hand over 150% of your tax bill in one January, then another 50% six months later. It evens out in year three, but year one lands like a brick.

What you can actually claim

Expenses have to be wholly and exclusively for the business. That's the test. Everything below passes it for a normal trade business.

• Materials and consumables. Everything on the merchant account, plus blades, bits, sealant, fixings.
• Tools. Small tools go straight through as an expense. Bigger kit goes through capital allowances, but the Annual Investment Allowance covers up to £1,000,000 a year, so in practice you claim the full cost in the year you bought it.
• The van. Two options. Simplified mileage at 45p per mile for the first 10,000 business miles and 25p after that, or actual running costs (fuel, insurance, tax, MOT, repairs) plus capital allowances on the van itself. Pick one and stick with it for that vehicle.
• Protective clothing and branded workwear. Boots, hi-vis, hard hats, gloves, knee pads, and anything with your firm's name on it.
• Insurance. Public liability, tool cover, van insurance if you're on the actual-cost method, professional indemnity.
• Scheme and body fees. Gas Safe, NICEIC, NAPIT, FMB, CSCS card renewals.
• Phone and internet. The business share. If you use the phone 60% for work, claim 60% of the bill. Keep the reasoning written down somewhere.
• Subcontractor payments. What you pay your subbies, gross of any CIS you deducted.
• Skip hire, plant hire, tip runs, parking at the job. Not parking fines.
• Advertising and lead fees. Checkatrade, MyBuilder, Google Ads, van signage, business cards.
• Accountancy and software. Your accountant's fee, your job management or invoicing subscription, your cloud storage.
• Use of home as an office. Simplified flat rate based on hours worked from home per month, or a proportion of your actual household bills if you want to do the sums.
• Bank charges and interest on a business account or business finance.
• Training that keeps your existing skills current. A Part P update or a gas reassessment is claimable.

What you cannot claim

• Ordinary clothing. Jeans and a t-shirt are not workwear just because you wore them on site.
• Parking tickets and speeding fines. Never allowable, however unfair the ticket was.
• Client entertaining. The customer's lunch is not deductible.
• Training that teaches you a brand new trade. A plumber taking a first electrical qualification is buying a new capability, not maintaining an existing one.
• Your own everyday meals, unless you're genuinely travelling away from your normal pattern of work.

Worked example: Wójcik Plumbing, 2025/26

Adam Wójcik trading as Wójcik Plumbing. Sole trader, no subbies on the books full time, one lad used on two bigger jobs. Not VAT registered. Here's the year.

Turnover: £62,000

Expenses:

• Materials and consumables: £14,500
• Van, 12,000 business miles (10,000 at 45p = £4,500, 2,000 at 25p = £500): £5,000
• Tools and small plant: £1,800
• Public liability and tool insurance: £520
• Gas Safe registration: £430
• Phone, 60% business share of £480: £288
• Accountant: £450
• Use of home as office: £312
• Checkatrade at £99 a month: £1,188
• Subcontract labour: £4,200

Total expenses: £28,688

Taxable profit: £62,000 minus £28,688 = £33,312

Now the tax, using 2025/26 rates:

• Personal allowance: £12,570
• Income taxed at basic rate: £33,312 minus £12,570 = £20,742
• Income tax at 20%: £4,148.40
• Class 4 National Insurance at 6% on profit between £12,570 and £50,270: 6% of £20,742 = £1,244.52
• Class 2 National Insurance: no longer charged for most self-employed people at this profit level, so £0

Total 2025/26 bill: £5,392.92

Now the January reality. The bill is over £1,000, so payments on account kick in:

• 31 January 2027: £5,392.92 balancing payment plus £2,696.46 first payment on account = £8,089.38
• 31 July 2027: £2,696.46 second payment on account

So £8,089.38 leaves the account in one hit at the worst point of the trade year, when January work is thin and Christmas has already been paid for.

The tax itself was 16% of profit. The January payment was 24% of profit. That gap is the whole problem, and it's why the sensible number to hold back is 30% of every payment as it lands, not 20%.

If you work under CIS, your return probably owes you money

Subcontractors get 20% deducted from their labour by the contractor, or 30% if they never registered. That money has already gone to HMRC in your name before it ever hits your bank.

On the return, you declare the full invoice value as turnover, not the net figure that landed. Then you enter the CIS deductions in their own box. HMRC sets the deductions against your bill.

Here's why that usually goes your way. CIS is taken off your turnover. Your tax is calculated on your profit. Profit is always smaller than turnover, so the deductions frequently overshoot what you owe and you get a refund.

Rough version on a £40,000 labour-only year: £8,000 deducted under CIS, but a profit of £34,000 after expenses produces a bill of around £5,500. That's a refund of roughly £2,500. Worth filing early in April rather than sitting on it until January.

Keep every payment and deduction statement your contractors send you. Without them, proving the deductions is a slog. The full CIS guide covers the contractor side.

Cash basis, and what changed in April 2026

Sole traders now use the cash basis by default. That means you record income when the money actually arrives and expenses when they actually go out, rather than when the invoice was raised. For most trades this is the right answer, because you're never taxed on an invoice the customer hasn't paid yet.

The bigger change is Making Tax Digital for Income Tax, which started phasing in from April 2026. Sole traders with qualifying income above the first threshold have to keep digital records and send HMRC quarterly updates rather than one annual return. Lower thresholds follow in the years after, so most working trades get pulled in eventually.

It sounds like more work. In practice it only is if your records live in a carrier bag. If you're already logging jobs and photographing receipts as you go, the quarterly update is a few taps. Check where you sit on the gov.uk threshold guidance, because the date you're pulled in depends on your turnover.

What NOT to do (the 5 that cost trades money)

1. Don't wait until January to think about it. The return covering April to April can be filed from 6 April. Filing early tells you the number without moving the payment date, so you know in April what's due in January. If you're owed a CIS refund, early filing puts it in your account nine months sooner.
2. Don't run business and personal money through one account. A separate business account is not a legal requirement for a sole trader, but untangling a personal account at year end costs you either a weekend or an accountant's hourly rate. Ten minutes to open, saves both.
3. Don't guess at the van. Mileage at 45p is simpler and usually better for a newer van bought on finance. Actual costs plus capital allowances usually wins for an older van doing high mileage. Work out both once, pick the winner, then leave it alone.
4. Don't forget you already paid tax through CIS. Trades genuinely file returns that ignore their deduction statements and pay a bill they'd already cleared. Every statement goes in the file.
5. Don't set the money aside "when I've got it". Tax kept in the current account is spent by February. It needs a different account, and the transfer needs to happen the day the customer pays, not at month end.

The habit that makes January boring

One rule. Every time a customer's payment lands, move 30% of it into a separate savings account and forget it exists.

Not 20%, because 20% covers income tax and nothing else. 30% covers the income tax, the Class 4 NI, and the payment on account that ambushes you in year one. If you end up over-saved, that's a van deposit, not a loss.

Do that and the January email from HMRC becomes a piece of admin rather than an event. The transfer takes fifteen seconds. Same principle as invoicing on the day you finish rather than the Sunday after: small habit, done immediately, removes a problem that would otherwise take a month of your life.

TradeStash tracks what's been invoiced and what's actually been paid, so the 30% comes off a real number rather than a guess. But the account and the standing habit matter more than the tool.

This is general information on how self assessment works, not tax advice for your situation. If your year has anything unusual in it, a decent accountant costs a few hundred pounds and usually finds more than that. Citizens Advice and gov.uk are both free.