Some taxpayers have already started to receive Simple Assessment letters from HMRC for the 2025-26 tax year, with a further tranche due to be sent between October and December 2026.
Simple Assessment is used where HMRC cannot collect income tax through PAYE or self-assessment. The PA302 letter sets
HMRC has launched an improved online service to make it easier for individuals to register for self-assessment. Anyone who needs to submit a tax return for the first time for the 2025-26 tax year should notify HMRC by 5 October 2026 to avoid a potential penalty.
The new service is available through
Self-employed people can choose to use simplified expenses to calculate certain business costs using flat rates rather than working out their actual expenses.
The system can save time and make record keeping easier, but it will not necessarily produce the best tax position. It is therefore worth
Self-employed people can deduct allowable business expenses when calculating their taxable profits. However, where a cost has both a business and private element, only the business proportion can normally be claimed.
For example, if a mobile phone bill is £200 for the year, with £70 relating to
HMRC is currently carrying out its annual reconciliation of PAYE for the 2025-26 tax year. Between June and November, HMRC calculates the Income Tax paid by individuals and checks whether the correct amount has been collected. Where HMRC identifies a difference, it may issue a tax calculation
Self-employed individuals can deduct allowable business expenses from their income when calculating taxable profits. However, businesses must keep accurate records and evidence to support the costs being claimed.
HMRC requires taxpayers to keep proof of business expenses, although evidence does not
Cash basis accounting is a simplified method used by sole traders and other unincorporated businesses to work out income and expenses for self-assessment in a straightforward manner.
The cash basis is the default method for calculating income and expenses for self-employed individuals and
The £1,000 property allowance is a helpful for individuals with small amounts of property income. The allowance provides a tax exemption of up to £1,000 a year against gross property income, meaning some landlords may not need to report their income to HMRC.
The allowance applies to income from
Employees who use their own vehicle for business journeys may receive Mileage Allowance Payments (MAPs) from their employer. These payments can be made tax-free up to HMRC’s approved amount, calculated by multiplying business miles travelled by the relevant rate per mile.
Effective since 6 April
Some self-employed individuals experience significant fluctuations in their profits from one year to the next. When this happens, HMRC’s averaging relief may help to regularise tax payments by levelling profits across more than one tax year.
However, the relief is only available to limited groups