Sole Traders and Self Employed
Find Out if You Are a Sole Trader or Self Employed
You act as an individual so our service to you will be based on your individual needs and circumstances.
There are many reasons why you may want the team here at Six Wands Aspects to help you with your finances. Here are a few examples:
- you’ve high earnings or substantial investments
- you’ve sold an asset
- you’ve a number of different sources of income
- you’ve self-employment income
- you’re a private landlord
- you’re a Company Director
- you need tax refunds related to employment expenses
- you’re a tradesman or covered by the Construction Industry Scheme (CIS).
Contact 6 Wands Accountants
You can rely on us to make sure you understand what you need to do, by when and what you will need to pay. And if there’s a lawful way of minimising your taxes we’ll do that for you too. Call us today on 0121 289 2080 or email our team on [email protected] and one of our specialist team will get back to you as soon as possible to answer your query.
Sole Traders & Self Employed FAQs
Do I need an accountant as a sole trader in the UK?
No, it isn’t a legal requirement for a sole trader to have an accountant in the UK. Many people choose to manage their own bookkeeping and Self Assessment, particularly when they’re just starting out.
That said, having an accountant can add real value. An accountant can help you save time, avoid costly mistakes, and stay compliant with HMRC, while also making sure you’re claiming all allowable expenses and not paying more tax than you need to.
At 6Wands, we offer more than just year‑end accounts. We provide ongoing support throughout the year, helping sole traders stay organised, confident, and in control of their finances. Whether it’s answering questions, keeping you on track with deadlines, or supporting you as your business grows, we’re here when you need us — not just once a year.
What expenses can I claim as a self‑employed sole trader?
As a self‑employed sole trader, you can usually claim expenses that are wholly and exclusively for business use. Claiming allowable expenses correctly helps reduce your taxable profit and ensures you don’t pay more tax than necessary.
Common examples of allowable expenses include:
- Travel costs such as business mileage, parking, train fares and accommodation for work trips
- Home office expenses, including a portion of household costs like electricity, heating, broadband or rent (where applicable)
- Equipment and tools, such as laptops, phones, software, tools, and other items needed to run your business
- Office and running costs, including stationery, printing, postage and subscriptions
- Professional fees, such as accountancy, legal fees and business insurance
- Marketing and advertising, including websites, hosting, and promotional materials
It’s important to claim expenses accurately and in line with HMRC rules. Claiming too little means you may overpay tax, while claiming incorrectly could lead to HMRC queries or penalties.
What records do I need to keep for self-assessment as a sole trader?
As a sole trader, you’re required to keep clear and accurate records to complete your Self Assessment tax return and meet HMRC requirements.
Key records you should keep include:
- Income records, such as sales invoices, till receipts, bank statements and payment platform reports
- Expense records, including receipts, bills, mileage logs and supplier invoices
- Business bank statements, if you have a separate business account
- Copies of invoices issued and records of payments received
- VAT records, if you’re VAT registered
HMRC requires most sole traders to keep records for at least 5 years after the 31 January submission deadline for the relevant tax year. Good record‑keeping not only keeps you compliant, but also makes tax returns quicker, easier and less stressful.
Staying organised is essential. Missing or incomplete records can lead to mistakes, delays, or HMRC queries — while poor organisation often means missed expenses and higher tax bills.
At 6Wands, we help sole traders keep their records accurate, organised and up to date throughout the year. We guide you on what needs to be kept, how to store it securely (including digital records), and ensure everything is ready when it’s time to file — giving you confidence that your Self Assessment is correct and compliant.
How much does an accountant cost for a sole trader?
The cost of an accountant for a sole trader can vary, as it depends on factors such as the complexity of your business, the level of support you need, and whether you want help just at year end or ongoing support throughout the year.
Some sole traders only need help with their annual Self Assessment, while others benefit from regular bookkeeping support, tax planning, and advice as their business grows. Because every business is different, there’s no one‑size‑fits‑all price.
Rather than seeing accountancy as a cost, many sole traders view it as an investment. A good accountant can save you time, reduce stress, help you avoid mistakes, and ensure you’re not paying more tax than necessary — often outweighing the fee itself.
At 6Wands, we focus on providing clear value and ongoing support, not just ticking boxes once a year. We work with you to offer the right level of help for your business, keeping everything accurate, compliant, and up to date — so you can focus on running your business with confidence.
Can an accountant help if I’m behind on my bookkeeping or tax returns?
Yes, and you’re not alone. Falling behind on bookkeeping or tax returns is very common for sole traders, especially when you’re busy running a business. The important thing is that it’s fixable, and getting support sooner rather than later can help reduce stress and limit potential HMRC issues.
An accountant can step in to help you get everything back up to date, even if records are incomplete or disorganised. This may include sorting through bank statements, reconstructing income and expenses, and preparing any outstanding tax returns accurately.
At 6Wands, we take a calm, practical approach. We’ll help you:
- Bring your bookkeeping and records up to date
- Prepare and submit overdue Self Assessment returns
- Identify any penalties or interest and explain your options
- Deal with HMRC on your behalf, where appropriate, to reduce pressure on you
Our focus is on resolving the situation efficiently and keeping things compliant — without judgement. Once everything is back on track, we can also put simple systems in place to help you stay organised and avoid falling behind again.
Making Tax Digital FAQs
What is Making Tax Digital and how does it affect sole traders?
Making Tax Digital (MTD) is an HMRC initiative designed to make the UK tax system more efficient, accurate and fully digital. Its aim is to reduce errors and move away from paper records and manual tax submissions.
For sole traders, MTD changes how financial records are kept and how information is submitted to HMRC. Instead of relying on spreadsheets or paper records, businesses will need to keep digital records and use HMRC‑compatible software to submit required information.
HMRC’s long‑term goal is for most taxes to be managed and reported digitally, with more regular submissions replacing the traditional once‑a‑year approach. While the rules are being introduced in stages, MTD represents a significant shift in how sole traders manage their bookkeeping and tax compliance.
At 6Wands, we help sole traders understand what Making Tax Digital means for them, ensure their records meet HMRC requirements, and put the right systems in place so the transition to digital reporting is simple, compliant and stress‑free.
When does Making Tax Digital apply to self-employed individuals?
Making Tax Digital (MTD) is being introduced in stages, so whether it applies to you depends mainly on your level of self‑employed income.
- From April 2026, MTD for Income Tax applies to self‑employed individuals (and landlords) with annual business or property income over £50,000.
- From April 2027, it will extend to those with income over £30,000.
- If your income is below £30,000, MTD does not yet apply, although HMRC plans to bring more people into the system in the future.
If MTD applies to you, you’ll need to:
- Keep digital records of your income and expenses
- Use MTD‑compatible software
- Submit updates to HMRC during the year, rather than relying only on one annual tax return
If you’re unsure whether MTD applies to you now, the key question is your total self‑employed (and/or rental) income, not your profit.
At 6Wands, we help sole traders understand when MTD applies to them, what they need to do, and how to prepare — whether that’s right now or further down the line. We make sure you’re ready at the right time, without unnecessary worry or over‑complication.
Do I need software for Making Tax Digital?
Yes. If Making Tax Digital (MTD) applies to you, HMRC requires you to use MTD‑compatible software to keep digital records and submit information to them. Paper records and basic spreadsheets alone will no longer be enough.
There are several software options available, including well‑known systems such as Xero and QuickBooks, which are designed to record income and expenses digitally and link directly with HMRC. The right choice depends on your business, how you work, and the level of support you want.
Using the right software helps you:
- Keep records accurate and up to date
- Reduce errors and duplication
- Stay compliant with HMRC requirements
- Save time compared to manual record‑keeping
At 6Wands, we help sole traders choose, set up and manage the right software for their business. We make sure your system meets MTD rules, works in a way that suits you, and stays accurate throughout the year, so you’re compliant without feeling overwhelmed by technology.
What happens if I don’t comply with Making Tax Digital?
If Making Tax Digital (MTD) applies to you and you don’t meet the requirements, HMRC may treat this as a compliance issue. This could lead to penalties, missed submissions, or increased attention from HMRC, particularly if problems continue over time.
Common issues include:
- Not keeping records in the required digital format
- Missing required MTD submissions
- Using software that isn’t MTD‑compatible
- Submitting incorrect or incomplete information
HMRC’s approach is designed to encourage compliance rather than catch people out, especially during the early stages of MTD. However, repeated non‑compliance or failure to engage can still result in financial penalties and added stress.
The good news is that most issues are avoidable with the right systems and support in place.
At 6Wands, we help sole traders stay on track with Making Tax Digital by ensuring records are kept correctly, submissions are made on time, and HMRC requirements are met. If you’re unsure whether you’re compliant or worried you might fall behind we provide clear guidance and ongoing support to keep everything accurate, organised and compliant, without unnecessary worry.
Can an accountant help me stay compliant with Making Tax Digital?
Yes, an accountant can play a key role in helping you stay fully compliant with Making Tax Digital (MTD) and avoid unnecessary stress or mistakes.
MTD involves more than just submitting figures to HMRC. It requires the right software, accurate digital records, and regular submissions, all done in line with HMRC rules. For many sole traders, this can feel time‑consuming or overwhelming alongside running a business.
At 6Wands, we support clients at every stage of the MTD process, including:
- Helping you choose and set up MTD‑compatible software
- Making sure your records are kept correctly and digitally
- Managing or supporting MTD submissions to HMRC
- Keeping everything up to date, accurate and compliant throughout the year
- Explaining what’s required in plain English, without jargon
Our aim is to reduce stress and remove uncertainty, so you can be confident that everything is being handled correctly. With 6Wands, you’re not left to navigate Making Tax Digital on your own, we’re there to keep you compliant, organised and focused on running your business.