Chartered Tax Advisers
Old Bishops' College

T: 01992 642024


Smiling businessmen and women

       Sole Trader

When you start a business for yourself, getting the foundations right is essential.  First of all you need a clear business plan to understand income, costs and cash flows.  You need to decide how to structure your business, whether you should be a sole trader or should form a limited company.  At Abbey we can help you start and run your business, giving you a helpful hand and advice when you need it.  We offer a range of services for new and established sole traders and businesses.  If you want help with your existing business or are thinking of starting a business today call us now for a free consultation.


Preparing bookkeeping records can be a time consuming and onerous task for business owners.  We can help with all your general bookkeeping requirements either at your offices or at ours.  We can either employ our own in-house expertise or help you recruit the right person for your business. We highly recommend Xero, cloud based, online bookkeeping software and would refer you to the Xero tab on our website.

Management Information

Regular management information is a vital aspect of managing and controlling a business. We will endeavour to work closely with you to get to know your business so that we can advise on how to maintain and improve profits as the business grows and develops. Monthly or quarterly management accounts can be prepared to enable you to manage your business.


For turnover in excess of £83,000 it is compulsory for most businesses to be registered for VAT although it is possible to register voluntarily below that limit.  All VAT registered businesses now have to prepare return forms (generally each quarter) and submit them online. In addition to the bookkeeping we can deal with all aspects of your VAT requirements and ensure that the VAT regulations are fully complied with. Our VAT services cover registering and de-registering for VAT, preparation of accurate VAT returns, review of assessments and ascertaining whether the flat rate scheme would be appropriate or advantageous.


Employing staff results in a legal requirement to operate a PAYE/RTI scheme. We offer a payroll service using Sage software and this involves a weekly or monthly service, advising on the PAYE and national insurance deductions, issuing payslips, forms P45 and P60. In addition the year end PAYE report is automatically prepared by our systems and ready for online submission.

Year End Accounts

For commercial and tax purposes it is necessary to prepare financial accounts for the period of trading which is normally for a 12 month period ending on the 31st March or 5th April.  This gives a historic  summary of what the business has achieved during this period and also forms the basis for the calculation of the tax liability arising thereon. 

Self Assessment

A self assessment tax return form will have to be completed disclosing the individual's full income for the tax year including his or her business income and expenditure as detailed in the year end accounts.  This return has to be submitted to HMRC by 31st January following the tax year end.  For example, for the 2015/16 tax year the return is due for online submission by 31st January 2017. 

Personal Tax

A sole trader's business income is added to their other personal income to arrive at the total income taxable on them as an individual.  The annual personal allowance of £11,000 is deducted to arrive at the net taxable income. The income tax rates currently applicable are 20% from £0 - £32,000, 40% from £32,001 - £100,000, 60% from 100,000 - £122,000, 40% from £122,001 - £150,000 and 45% from £150,000 onwards. 

National Insurance

A sole trader pays both class 2 and class 4 national insurance.  Class 2 national insurance is £2.80 per week.  Class 4 national insurance is 9% on net business profits between £8,060 and £43,000.  Over £43,000 the rate is 2%. Class 2 and 4 national insurance is payable at the same time as the income tax (see below).

Payment of Tax/Class 2 and 4 National Insurance

Payment of tax and class 4 national insurance is every 6 months on 31st January and July.  When a business first commences, depending on timing, there can be a long period before tax becomes payable and it is paramount that a tax reserve is retained on an ongoing basis to avoid cash flow problems in the future. 

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