Accountants for sole traders in London
You do not legally need an accountant as a sole trader, but most people use one to register with HMRC, keep records that meet Making Tax Digital rules, claim the right expenses and file Self Assessment on time. IB&Co Accountants in Canary Wharf looks after sole traders across London.
Do I need an accountant as a sole trader?
No law says you must have one. You can register, keep records and file your own Self Assessment return. Sole traders usually bring in an accountant when:
- they are not sure which expenses they can claim
- their income is growing and they want to plan for the tax bill and payments on account
- Making Tax Digital is about to apply to them
- they have fallen behind on returns
- they are wondering whether to become a limited company
A good accountant should save you time, help you avoid penalties and give you a clear picture of what you will owe before the bill arrives.
When do I have to register as a sole trader?
You can start trading straight away, but you must register for Self Assessment if you earn more than £1,000 from self-employment in a tax year, before taking off expenses. That £1,000 is the trading allowance. At Budget 2026 on 28 October 2026, the Chancellor announced that the trading allowance will rise to £3,000 from 6 April 2027. This is a proposal until Finance Bill 2026-27 becomes law, and HMRC’s guidance on when you must register has not yet changed.
You must tell HMRC by 5 October after the end of the tax year in which you started. For example, if you started trading in the 2025 to 2026 tax year, the deadline to tell HMRC was 5 October 2026. Our Tax Registration with HMRC service handles this for you.
What tax and National Insurance does a sole trader pay?
You pay Income Tax on your profits, which is your income minus allowable expenses, through Self Assessment. For 2026 to 2027 you also pay Class 4 National Insurance of 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. If your profits are £7,105 or more, Class 2 contributions are treated as paid, so you do not pay them but your National Insurance record is protected.
Your online tax return and any balance due must reach HMRC by 31 January after the tax year ends. If you pay through payments on account, the second payment is due on 31 July. Many new sole traders are surprised in their second year, when the first payment on account lands on top of the balancing payment. We forecast this for you so you can plan for it.
Which expenses can a sole trader claim?
Allowable expenses are costs incurred wholly and exclusively for your business, such as stock and materials, business travel, phone and internet use for work, professional subscriptions and insurance. If your costs are low, you can choose to use the trading allowance instead of claiming actual expenses. We work out which is better for you each year.
Does Making Tax Digital apply to sole traders?
It may. You have had to use Making Tax Digital for Income Tax from 6 April 2026 if your qualifying income, meaning turnover from self-employment and property before expenses, was over £50,000 in the 2024 to 2025 tax year. It applies from 6 April 2027 if it was over £30,000 in 2025 to 2026, and from 6 April 2028 if it is over £20,000 in 2026 to 2027. That means keeping digital records and sending quarterly updates. Our Making Tax Digital page has the detail, and we can set up compatible software for you.
When should a sole trader register for VAT?
When your VAT taxable turnover for the last 12 months goes over £90,000, or you expect it to in the next 30 days. You can also register voluntarily. We keep an eye on your rolling turnover so the threshold does not catch you out.
Should I stay a sole trader or set up a limited company?
There is no single answer. Being a sole trader is the simplest structure to set up and run, but you have unlimited liability, meaning you are personally responsible for the business’s debts. A limited company can make sense at higher profits or where liability matters, but it brings more administration. We compare the two using your own figures. If you work through contracts or agencies, our Contractors, Self-Employed & Freelancers page and contractors tax guide cover that side.
What IB&Co does for sole traders
- register you with HMRC for Self Assessment
- set up simple digital bookkeeping in QuickBooks or Xero, with bank feeds
- prepare and file your Self Assessment tax return
- forecast your tax bill and payments on account
- handle Making Tax Digital quarterly updates when they apply
- deal with HMRC for you, including all correspondence
We are regulated by the IFA and IPA, and led by Ishmael Bangura FFA, who started out as a sole trader himself before incorporating the practice in 2018.
Related services: VAT returns, late tax return support and Making Tax Digital for landlords. See how our fees for sole traders work.
Frequently asked questions
No, it is not a legal requirement. Many sole traders use one to save time, claim the right expenses, plan for their tax bill and stay on top of Making Tax Digital.
You must register for Self Assessment if your self-employed income is more than £1,000 in a tax year. At Budget 2026 the Chancellor announced that the trading allowance will rise to £3,000 from 6 April 2027. This is a proposal until Finance Bill 2026-27 becomes law.
For 2026 to 2027, Class 4 at 6% on profits between £12,570 and £50,270 and 2% above that. Class 2 is treated as paid if profits are £7,105 or more.
The online return and any tax owed are due by 31 January after the end of the tax year. A second payment on account, if you make them, is due by 31 July.
It applies from 6 April 2026 if your qualifying income was over £50,000 in 2024 to 2025, from 6 April 2027 if it was over £30,000 in 2025 to 2026, and from 6 April 2028 if it is over £20,000 in 2026 to 2027.
There is no single price, because the work varies: a Self Assessment return only, or bookkeeping, VAT and Making Tax Digital updates as well. Our sole trader service starts from £59.99 a month, depending on how complex the work is. After a no-obligation Discovery Call we send a written proposal with a fixed fee for the work you need, before anything starts. Our accountancy fees page explains what affects the cost.
Talk to us about your business
Book a Discovery Call and we will look at your records, your deadlines and what you need from an accountant.
Call 020 7164 0225 or visit us at Level 37, 1 Canada Square, Canary Wharf, London E14 5AA. Open Monday to Friday 9:00 to 18:30 and Saturday 10:30 to 16:30.
Checked on 11 November 2026. This page is general information based on HMRC guidance at that date, and is not advice for your circumstances.
