Accountants for Sole Traders
Self assessment, Making Tax Digital, expenses and VAT for sole traders and the self-employed across North London and Hertfordshire. Fixed fees from £250 a year, and a straight answer on when a limited company would pay.
Being a sole trader is the simplest way to run a business, and for a lot of tradespeople, consultants, drivers, therapists and creatives it stays the right structure for years. The tax side is not complicated, but it is unforgiving. Miss the 31 January deadline and there is a £100 penalty on day one. Forget payments on account and July brings a bill you did not budget for. And from April 2026, Making Tax Digital replaces the once-a-year return with quarterly updates for anyone with income over £50,000.
We look after sole traders across Barnet, Enfield, Finchley, Potters Bar, Cheshunt and the rest of North London and Hertfordshire, from one-person businesses with a few thousand pounds of income to established trades turning over several hundred thousand. Most want the same thing: a return that is right, filed early, with every allowable expense claimed, and someone to call when a question comes up.
This page covers what we do for sole traders, how Making Tax Digital works, what you can and cannot claim, and the point at which a limited company starts to make sense.
What sole traders usually need help with
Self assessment and payments on account
Your return covers the year to 5 April and is due online by 31 January, with the balancing payment and the first payment on account for the following year due the same day. We file early, usually by the autumn, so you know the January figure months ahead.
Making Tax Digital for Income Tax
From April 2026, sole traders with gross income over £50,000 must keep digital records and send quarterly updates to HMRC, with the threshold dropping to £30,000 in April 2027 and £20,000 in April 2028. We set up the software and handle every submission.
What you can claim
Tools, materials, van and mileage, phone, home office, insurance, training, subscriptions, accountancy and the £1,000 trading allowance where it beats actual costs. We make sure the claims are complete and that the evidence exists if HMRC asks.
National Insurance
Class 2 contributions are no longer compulsory, but you still build state pension entitlement if your profits exceed the small profits threshold. Class 4 is charged at 6% on profits between £12,570 and £50,270 and 2% above. We check the position each year so your pension record is protected.
VAT registration
You must register once taxable turnover in any rolling 12 months passes £90,000, and you can register voluntarily before that if your customers are VAT registered. We monitor the threshold, choose the right scheme and file the quarterly returns.
Sole trader or limited company
Somewhere between £30,000 and £50,000 of profit, a limited company often starts to save tax, but it adds cost and admin. We run the comparison with your figures each year and tell you when the switch is worth making.
Services for sole traders
Personal tax and self assessment
Your sole trader pages, any employment, rental or dividend income, and the reliefs you are entitled to, filed early.
Learn more →Bookkeeping
Digital records that satisfy Making Tax Digital, with receipts captured from your phone and bank feeds categorised for you.
Learn more →VAT advice and returns
Threshold monitoring, registration, scheme choice and quarterly MTD returns.
Learn more →Tax planning
Timing of purchases, pension contributions, the trading allowance, and the sole trader versus company comparison.
Learn more →Payroll and CIS
If you take on staff, or work as a CIS subcontractor, we run the payroll and reclaim CIS deductions through your return.
Learn more →Xero setup
A simple Xero or app-based set-up sized for a sole trader, with training so you can keep it current in minutes a week.
Learn more →Making Tax Digital for sole traders: what you have to do
Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords whose combined gross income from self-employment and property was over £50,000 in the 2024/25 tax year. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. Gross means before expenses, so a builder with £60,000 of sales and £25,000 of materials is in scope even though the profit is £35,000.
Once you are in, you keep your records in HMRC-recognised software, send a summary of income and expenses for each quarter within a month of the quarter end, and file a final declaration by 31 January that confirms the year's figures and any other income. The old self assessment return disappears for the trade, though the tax payment dates stay the same. Penalties move to a points system, with a point for each late submission and a fine once you reach the threshold.
We choose the software with you, connect your bank feed, categorise the transactions each quarter and file the update. Because the records are kept through the year, you also get a running estimate of the tax you owe, which is the part most sole traders find genuinely useful.
- Software recommended and set up for your type of business
- Quarterly updates prepared and submitted from your bank feed
- Final declaration filed with all other income and reliefs included
- Running tax estimate so the January payment is never a surprise
What a sole trader can claim
The rule is that an expense must be incurred wholly and exclusively for the business. Materials, stock, subcontractors, a van and its running costs, mileage at 45p for the first 10,000 business miles in a car, tools and equipment, insurance, phone and internet, software, advertising, bank charges, training that maintains existing skills and professional fees all qualify. Where something is used for both business and private purposes, such as a phone or a car, you claim the business proportion.
Working from home can be claimed using HMRC's flat rate of £10 to £26 a month depending on hours, or an apportionment of actual household costs. The cash basis is now the default for sole traders, so income counts when it is received and expenses when they are paid, which simplifies the records for most small businesses. If your gross trading income is under £1,000 the trading allowance means you may not need to report it at all, and above that you can deduct the £1,000 instead of actual expenses when that gives a better result.
When does a limited company make sense?
As a sole trader you pay income tax at 20%, 40% or 45% plus Class 4 National Insurance on all of your profit, whether you draw it or not. A limited company pays corporation tax at 19% to 25% and you then pay dividend tax only on what you take out. For a business with profits around £30,000 the saving is small and the extra costs of running a company can wipe it out. At £50,000 and above, particularly if you can leave some profit in the company or pay into a pension from it, the company usually comes out ahead.
Tax is not the only consideration. A company gives you limited liability, which matters in trades and anything with contract risk. It can make you look more established to customers and lenders. Against that it means statutory accounts, a corporation tax return, a confirmation statement and Companies House identity verification, and your business information becomes public. We run the comparison with your real numbers each year and tell you plainly when it is worth switching, and we handle the transfer when it is.
Why sole traders choose IAK
- Self assessment from £250 a year, quoted in writing
- Returns filed early so you know the January bill in advance
- Making Tax Digital set-up and quarterly updates included where you need them
- Every allowable expense checked, with the evidence kept tidy
- Honest advice on when a limited company would pay
- Same-day replies on weekdays by phone, email or WhatsApp
Frequently asked questions
How much does an accountant cost for a sole trader?
A straightforward self assessment return starts around £250 a year. Sole traders who are within Making Tax Digital, or who are VAT registered, are usually on a small fixed monthly fee that covers the bookkeeping, quarterly updates, VAT returns and the year-end declaration. We quote before any work starts.
Do I need an accountant as a sole trader?
Not legally. Many sole traders with simple affairs file their own return. An accountant earns their fee when there is a van, a home office, CIS deductions, VAT, property income or Making Tax Digital in the picture, or when you simply want the certainty that it is right and filed early.
When do I have to register as self-employed?
By 5 October following the end of the tax year in which you started trading. If you started in June 2026, that is 5 October 2027. Registering earlier avoids a rush and gets your Unique Taxpayer Reference in place well before the first return.
What are payments on account?
If your tax bill is over £1,000 and less than 80% of it is collected at source, HMRC asks for half of the following year's estimated tax on 31 January and half on 31 July. They are advance payments, not extra tax, and they can be reduced if you know your income is falling. We calculate and, where appropriate, reduce them for you.
Can I claim for my van and my mileage?
For a van you can claim the actual running costs plus capital allowances on the purchase, or a flat rate per mile. For a car most sole traders use the 45p per mile rate for the first 10,000 business miles and 25p after that. You must pick one method per vehicle and keep a mileage log.
I am a CIS subcontractor. How do I get my deductions back?
The 20% (or 30% if unverified) deducted by contractors is set against your income tax and Class 4 National Insurance on your self assessment return. Any excess is refunded. We reconcile your CIS statements to your invoices so nothing is missed.
Do you work with sole traders outside North London?
Yes. The work runs through cloud software and video calls, so we act for sole traders across the UK. Local clients in Barnet, Enfield, Finchley, Potters Bar and Hertfordshire are welcome at our office in Cuffley.
Guides and calculators on this topic
Free reading and tools from our insights library if you want the detail before you speak to us.
Get your self assessment done early this year
Send us last year's return and a rough idea of this year's income. We will tell you what you missed, what Making Tax Digital means for you, and quote a fixed fee, all free of charge.