If you are a sole trader you must file a self assessment tax return every year, either on paper or online.
Before you can file a tax return you must register as self employed, with HMRC here. When you register you can also request online access, if you didn’t do that at the time of registering you can do that here.
The tax year runs from 6th April – 5th April, for the purpose of this article we’ll use the 2019-20 tax year that runs from 6th April 2019 – 5th April 2020. The tax return for that year must be filed on paper by 31st October 2020 or online by 31 January 2021.
Once you have created your tax return (or had a bookkeeper do it for you) and submitted it online you will need to pay your tax and national insurance liability by 31 January (the online filing deadline).
If your liability is over £1,000 you will also need to make 2 on account payments for the next tax year, when you pay for the current years’ liability. For example:
Your tax & NI liability for 2019-20 tax year is £1,200 and it’s due to be paid 31 January 2021.
Because your liability is over £1,000 50% of your 2019-20 liability needs to be paid on account towards your 2020-21 liability.
So, also on 31 January 2021 you’ll need to pay £600 on account for 2020-21. Making a total of £1,800 due 31 January 2021.
The 2nd on account payment is due 31 July 2021 for £600.
When the 2020-21 tax & NI liability is due, you’ll need to make sure you deduct the 2 on account payment from the total, before paying over.
NOTE: If you submit your tax return yourself HMRC do not deduct these on account payments from the calculation screen at the end of the submission. However, if you submit your return before November you usually get a statement of account in January to remind you what you need to pay, and this will take into account the on account payments.