Self employment / Sole-trader - when to pay tax

Jimeji

After being employed my entire working career I have begun working as a sole-trader. I have recieved my first payment. 

When and how do I make payment for tax? Will it be on this years tax return which is due 31 Jan 2026? If so, am I expected to keep hold of the money until payment is due?

Dazed_and_C0nfused

Jimeji said:

After being employed my entire working career I have begun working as a sole-trader. I have recieved my first payment. 

When and how do I make payment for tax? Will it be on this years tax return which is due 31 Jan 2026? If so, am I expected to keep hold of the money until payment is due?

Yes, tax due for 2024-25 from a first Self Assessment return will be payable by 32 January 2026.

If you register for Self Assessment as soon as your turnover hits £1,000 then you will receive your UTR (unique taxpayer reference) and can make payments onto your account of you want.

But HMRC don't pay interest on tax paid early in that way so you would normally be better off financially by putting money aside in an interest paying account.

ElefantEd

Personally I pay any tax due as soon as I do my online self-assessment, just to get it out of the way (usually in May or June, with an end of year in April). But I don't usually pay an awful lot, as I don't earn an awful lot!

Is Jan 2026 an extra leap year by the way? 32nd January will make the winter seem longer than usual, or maybe someone is just Dazed and Confused!

DullGreyGuy

Jimeji said:

After being employed my entire working career I have begun working as a sole-trader. I have recieved my first payment. 

When and how do I make payment for tax? Will it be on this years tax return which is due 31 Jan 2026? If so, am I expected to keep hold of the money until payment is due?

That is the deadline for paying it. In principle you can complete the tax return much sooner and so could pay it 9 months earlier if you wanted. 

Dazed_and_C0nfused

ElefantEd said:

Personally I pay any tax due as soon as I do my online self-assessment, just to get it out of the way (usually in May or June, with an end of year in April). But I don't usually pay an awful lot, as I don't earn an awful lot!

Is Jan 2026 an extra leap year by the way? 32nd January will make the winter seem longer than usual, or maybe someone is just Dazed and Confused!

Or just careless 😟

SensibleSarah

Personally, I do my self-assessment return on April 6th every year, so I know exactly what is due the following Jan, then just make the actual payments to HMRC on the month due so I can earn interest on it in a savings account in the meantime. 

Dazed_and_C0nfused

SensibleSarah said:

Personally, I do my self-assessment return on April 6th every year, so I know exactly what is due the following Jan, then just make the actual payments to HMRC on the month due so I can earn interest on it in a savings account in the meantime. 

Very sensible approach 🙂

noitsnotme

Dazed_and_C0nfused said:

Jimeji said:

After being employed my entire working career I have begun working as a sole-trader. I have recieved my first payment. 

When and how do I make payment for tax? Will it be on this years tax return which is due 31 Jan 2026? If so, am I expected to keep hold of the money until payment is due?

But HMRC don't pay interest on tax paid early in that way so you would normally be better off financially by putting money aside in an interest paying account.

I thought they did pay interest?  Isn't it called repayment interest?  Looks like its currently 3.75% - https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates. 

I have interest credits on my personal tax account which I thought were for paying my tax earlier than the deadlines (31st Jan/31st Jul).  Or are they something else?

Dazed_and_C0nfused

noitsnotme said:

Dazed_and_C0nfused said:

Jimeji said:

After being employed my entire working career I have begun working as a sole-trader. I have recieved my first payment. 

When and how do I make payment for tax? Will it be on this years tax return which is due 31 Jan 2026? If so, am I expected to keep hold of the money until payment is due?

But HMRC don't pay interest on tax paid early in that way so you would normally be better off financially by putting money aside in an interest paying account.

I thought they did pay interest?  Isn't it called repayment interest?  Looks like its currently 3.75% - https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates. 

I have interest credits on my personal tax account which I thought were for paying my tax earlier than the deadlines (31st Jan/31st Jul).  Or are they something else?

They pay interest on tax you were asked to pay and is then overpaid, if you just pay early then no interest is paid.

noitsnotme

Dazed_and_C0nfused said:

noitsnotme said:

Dazed_and_C0nfused said:

Jimeji said:

After being employed my entire working career I have begun working as a sole-trader. I have recieved my first payment. 

When and how do I make payment for tax? Will it be on this years tax return which is due 31 Jan 2026? If so, am I expected to keep hold of the money until payment is due?

But HMRC don't pay interest on tax paid early in that way so you would normally be better off financially by putting money aside in an interest paying account.

I thought they did pay interest?  Isn't it called repayment interest?  Looks like its currently 3.75% - https://www.gov.uk/government/publications/rates-and-allowances-hmrc-interest-rates-for-late-and-early-payments/rates-and-allowances-hmrc-interest-rates. 

I have interest credits on my personal tax account which I thought were for paying my tax earlier than the deadlines (31st Jan/31st Jul).  Or are they something else?

They pay interest on tax you were asked to pay and is then overpaid, if you just pay early then no interest is paid.

Ah yes, I see what you mean now.  I've just checked and I can see it relates to an overpayment that occurred due to the previous years payments on account being higher than eventually needed.