Once you’re trading, tax stops being an annual afterthought and becomes something you’re managing year-round. Which system applies to you — Self Assessment or Corporation Tax — depends entirely on your business structure, and the two work quite differently.
Sole traders: Self Assessment
As a sole trader, all your business profit is treated as personal income. There’s no separation between “the business’s money” and “your money” — it’s taxed as one.
Each year, you file a Self Assessment tax return covering:
- Income Tax on your profits, at the standard personal rates and bands
- Class 2 National Insurance, if profits are above the small profits threshold
- Class 4 National Insurance, calculated as a percentage of profits above a certain level
- Corporation Tax is due 9 months and 1 day after the end of the company’s accounting period — earlier than the Self Assessment deadline, and easy to lose track of since it’s tied to your company’s year end, not the tax year
- The company must file a Company Tax Return (CT600) with HMRC, usually within 12 months of the accounting period end — though payment is due earlier than filing
- You must register for Corporation Tax within 3 months of starting to trade
- Salary, run through PAYE, which is subject to Income Tax and National Insurance like any employment income
- Dividends, paid from post-tax company profits, taxed at dividend rates through your own Self Assessment return
The tax year runs 6 April to 5 April. Your return is due by 31 January following the end of that tax year, and any tax owed is due by the same date. If your tax bill is large enough, you may also need to make “payments on account” — advance payments toward next year’s bill, split across January and July.
Example: A sole trader with £35,000 of profit in the 2025/26 tax year needs to file and pay by 31 January 2027, and may need to make a payment on account toward the 2026/27 bill at the same time.
Because there’s no separate business account for tax purposes, many sole traders set aside a percentage of each payment they receive — often 20–30% depending on their income level — in a separate savings account, so the tax bill doesn’t come as a shock.
Limited companies: Corporation Tax
A limited company is a separate legal entity, and it pays tax on its own profits — not you personally. This is Corporation Tax, currently charged on company profits after allowable expenses.
Key points:
Example: A company with an accounting year ending 31 March 2026 must pay any Corporation Tax owed by 1 January 2027, even though the tax return itself doesn’t have to be filed until 31 March 2027.
Then there’s what you take out of the company
Corporation Tax only covers the company’s profits — it doesn’t cover what you personally take out. As a director and shareholder, you’ll typically take income via:
This means a company director very often still needs to file a personal Self Assessment return, even though the company itself pays Corporation Tax. The two systems run in parallel rather than one replacing the other.
Example: A director paying themselves a modest salary plus dividends will file a CT600 for the company and a personal Self Assessment return covering their salary and dividend income — two separate returns, two separate deadlines.
Side by side
| Sole Trader | Limited Company | |
|---|---|---|
| Tax on | All profits, as personal income | Company profits (Corporation Tax); separately, salary/dividends taken out |
| Filed via | Self Assessment | Company Tax Return (CT600), plus personal Self Assessment for the director |
| Filing deadline | 31 January | Return: 12 months after accounting period end. Payment: 9 months and 1 day after |
| Tax year basis | 6 April – 5 April | Company’s own accounting period |
Making Tax Digital
Both structures are increasingly affected by Making Tax Digital, HMRC’s move toward digital record-keeping and more frequent reporting rather than a single annual return. The detail of what applies and when depends on your income level and structure, and is worth checking against current HMRC guidance, since the rules have been phased in gradually.
The practical takeaway
Whichever structure you’re in, the deadlines that matter aren’t just the filing date — they’re the payment date, which can arrive earlier than you expect, particularly for limited companies. Knowing which system applies to you, and marking the right dates rather than assuming they mirror the tax year, is most of the battle.