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Tax & accounting guides
Plain English explanations of the tax and compliance basics for landlords, sole traders and limited companies, with direct links to HMRC and Companies House so you can go straight to the official source. Updated for the 2026/27 tax year.
Last updated 21 September 2026. This is general guidance, not personalised advice, every situation is different, so get in touch if you would like this checked against your own numbers.
Self Assessment basics
The core rules that apply whether you are self-employed, a landlord, or have other untaxed income to declare.
How to register for Self Assessment
If you’re newly self-employed, become a landlord, or start receiving income that isn’t taxed at source, you’ll usually need to register for Self Assessment with HMRC. You must tell HMRC by 5 October following the end of the tax year the income started (for the 2025 to 2026 tax year, that’s 5 October 2026). Once registered, HMRC sets up your account and issues a Unique Taxpayer Reference (UTR), which you’ll need every time you file.
Self Assessment deadlines and key dates
The 2025 to 2026 tax year runs from 6 April 2025 to 5 April 2026. Register by 5 October 2026 if you need to. Paper returns are due by 31 October 2026, online returns by 31 January 2027, and any tax owed must also be paid by 31 January 2027. If you make payments on account, the second instalment falls on 31 July. It’s worth diarising these dates well ahead rather than working backwards from January.
What happens if you miss the deadline
Filing late brings an immediate £100 penalty, even if you owe no tax. After 3 months, HMRC adds £10 a day up to a maximum of £900. After 6 months, a further 5% of the tax due or £300 (whichever is greater) is charged, and the same again after 12 months. Paying late is penalised separately: 5% of the unpaid tax at 30 days, 6 months and 12 months, plus daily interest throughout.
Do you need to file a tax return?
You’ll normally need to file if you’re self-employed and earned more than £1,000, you’re a company director, you have rental profit above £2,500 (or income above £10,000 before expenses), you have untaxed income such as dividends, or your household income was over £60,000 and either of you claims Child Benefit. HMRC’s online checker confirms this in a couple of minutes, and we’re always happy to talk it through if you’re unsure.
What expenses can you claim as self-employed?
You can deduct any cost incurred wholly and exclusively for running your business: stock, tools, business insurance, professional fees, a share of home working costs, and business mileage. As an alternative to tracking every receipt, you can instead claim the £1,000 tax-free trading allowance. You can’t claim both the trading allowance and actual expenses for the same income, so it’s worth checking which gives the better result each year.
How to pay your tax bill
Once you’ve filed, your bill is due by 31 January following the end of the tax year. If it’s over £1,000 and not your first year in Self Assessment, you’ll usually also make payments on account toward next year’s bill, split between 31 January and 31 July. You can pay online or by bank transfer, or (for smaller underpayments under £3,000) have it collected through your tax code automatically if you file by 30 December.
Guides for sole traders
What to know if you trade as a sole trader, from registering through to how your profit is taxed.
Sole trader vs limited company: which is right for you?
As a sole trader, you and the business are legally the same thing, simple to set up, but you’re personally liable for any debts, and all profit is taxed as personal income. A limited company is a separate legal entity giving limited liability, with profits taxed at Corporation Tax rates (19% to 25%) before you draw money out, often more tax efficient once profits climb past roughly £30,000 to £40,000, but with more admin. It comes down to your profit level, protection needs, and appetite for extra filing.
How to register as a sole trader
You can start trading as a sole trader immediately, but must register for Self Assessment once your self-employment income passes £1,000 in a tax year. Registration is free and done online through HMRC using a Government Gateway account. You’ll then receive your Unique Taxpayer Reference (UTR) by post, usually within about 10 working days.
What records do sole traders need to keep?
You need records of all business income and expenses: sales invoices, receipts, bank statements, and anything supporting figures on your return, such as mileage logs. HMRC expects these kept for at least 5 years after the 31 January submission deadline of the relevant tax year, so 2025/26 records should be kept until at least 31 January 2032. Good digital records also make MTD, if it applies to you, far easier.
Sole trader tax explained: Income Tax and National Insurance
Your profit is taxed the same way as employment income: the first £12,570 is tax-free, then 20% up to £50,270, 40% up to £125,140, and 45% above. You’ll also pay Class 4 National Insurance once profits exceed £12,570: 6% on profits between £12,570 and £50,270, and 2% above. Profits under £7,105 mean no Class 2 is due either, though your National Insurance record stays protected.
Guides for limited companies
The Companies House and HMRC responsibilities that come with running a limited company.
How to set up a limited company
Setting up a limited company means registering with Companies House rather than, or as well as, HMRC. You’ll choose an available company name, appoint at least one director, decide on shareholders and how many shares each holds, and prepare a memorandum and articles of association (Companies House provides standard templates). Online registration usually costs £50 and is often approved within 24 hours. Once incorporated, you separately need to register for Corporation Tax with HMRC within 3 months of starting to trade.
Corporation Tax explained
Limited companies pay Corporation Tax on profits instead of Income Tax. The main rate is 25% for profits over £250,000, and a small profits rate of 19% applies if profits are £50,000 or less. Between those figures, Marginal Relief gradually increases your effective rate rather than jumping straight to 25%. Your Company Tax Return (CT600) is due 12 months after your accounting period ends, but the tax itself is due earlier, normally 9 months and 1 day after the period ends.
Director’s salary vs dividends: the tax efficient split
Most director-shareholders take a small salary, often set around the National Insurance threshold, and draw the rest as dividends, since dividends aren’t subject to National Insurance. You get a £500 tax-free dividend allowance each year, then dividends are taxed at 10.75% (basic rate), 35.75% (higher rate) or 39.35% (additional rate). The right split depends on your other income and pension contributions, so it’s worth reviewing every tax year rather than leaving it on autopilot.
What is a confirmation statement, and when is it due?
A confirmation statement is an annual check-in with Companies House confirming your company’s registered details (directors, registered office, shareholders) are still correct. You must file at least one every 12 months, within 14 days of your review period ending, costing £50 online. It isn’t just a fine risk, Companies House can eventually strike an unfiled company off the register, so it’s a small admin job that’s easy to overlook but genuinely serious if ignored.
Filing deadlines for limited companies
Limited companies juggle two filing regimes. With Companies House, annual accounts are due 9 months after your financial year end (first year has different rules), plus your confirmation statement annually. With HMRC, your Company Tax Return is due 12 months after your accounting period ends, but Corporation Tax must be paid 9 months and 1 day after the period ends, earlier than the return itself. Companies House penalties for late accounts start at £150 and rise to £1,500 the later you leave it.
Guides for landlords
How rental income and property sales are taxed, and what changed recently for holiday lets.
How rental income is taxed
Rental profit (income minus allowable expenses) is added to your other income and taxed at the normal Income Tax rates of 20%, 40% or 45%. If you own the property personally, you can no longer deduct mortgage interest as an expense; instead you get a 20% tax credit on interest paid, which can be less generous than a full deduction for higher rate taxpayers. Company-owned property is different: mortgage interest remains a normal deductible expense against Corporation Tax.
What expenses can landlords claim?
You can deduct costs incurred wholly for letting the property: letting agent and accountancy fees, landlord insurance, day to day repairs (not improvements), utility bills you pay, ground rent and service charges, and direct letting costs like advertising. You can also claim replacement of domestic items relief when you replace things like a sofa, carpet or fridge for tenants’ use. The first £1,000 of rental income each year is covered by the tax-free property allowance if you’d rather not track expenses individually.
Do landlords need to register for Self Assessment?
If your rental income is under £1,000 a year, you generally don’t need to tell HMRC at all. Between £1,000 and £2,500, you may not need to register but should contact HMRC to check. Above £2,500 profit, or £10,000 income before expenses, you’ll need to register for Self Assessment by 5 October following the end of the tax year the income started.
Furnished holiday lets: what changed
The furnished holiday lettings regime, which gave extra reliefs like full mortgage interest deduction and certain Capital Gains Tax reliefs, ended on 6 April 2025 for Income Tax and Capital Gains Tax purposes. Furnished holiday lets are now taxed the same as any other residential letting: profits taxed as rental income, mortgage interest restricted to the 20% tax credit rather than a full deduction. If you previously relied on these reliefs, it’s worth reviewing your numbers.
Capital Gains Tax when selling a rental property
When you sell a rental property for more than you paid (after allowable costs like Stamp Duty and improvements), the gain is subject to Capital Gains Tax. You get an annual tax-free allowance of £3,000, and above that basic rate taxpayers pay 18% and higher or additional rate taxpayers pay 24%, for disposals from 6 April 2026. You must report and pay any Capital Gains Tax on UK residential property within 60 days of completion, separately from your normal Self Assessment return.
VAT and Making Tax Digital
When VAT registration kicks in, and how Making Tax Digital is changing the way Self Assessment works.
Do you need to register for VAT?
You must register for VAT once your taxable turnover for the past 12 months goes over £90,000, or if you expect to go over that in the next 30 days alone. You have 30 days from the end of the month you crossed the threshold to register, usually charging VAT from the first day of the second month after. You can also register voluntarily below the threshold to reclaim VAT on business expenses, worth considering if most of your customers are VAT registered themselves.
Making Tax Digital for Income Tax: what it means for you
MTD for Income Tax is replacing the annual Self Assessment return for sole traders and landlords with digital record keeping and quarterly updates sent through compatible software. It’s phased in by income: if your qualifying income was over £50,000 on your 2024/25 return, MTD became mandatory from 6 April 2026. The threshold drops to £30,000 from April 2027, and £20,000 from April 2028. It’s worth getting your bookkeeping software sorted well before your start date rather than in the final weeks.
VAT schemes explained: flat rate vs standard
Under standard VAT accounting, you charge VAT on sales and reclaim VAT on purchases, paying HMRC the difference. The Flat Rate Scheme, open to businesses with turnover under £150,000, simplifies this by having you pay a fixed percentage of VAT-inclusive turnover instead, with the rate depending on your trade sector, and you generally can’t reclaim VAT on most purchases. It can mean less admin, but it isn’t automatically cheaper, so it’s worth comparing both methods against your actual figures first.
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