This is the second of two articles on areas to keep in mind when completing the self-employment pages of the self assessment (SA) tax return for 2024/25. The first article focused on the changes to the cash basis.

Applying the tax year basis 

2024/25 is the first year in which business profits are taxed on a tax year basis (ie, from 6 April to the following 5 April). Previously, for 2022/23 and earlier, business profits were taxed according to the basis period, while 2023/24 was a transitional year. This is explained in detail in ICAEW’s TAXguide 02/22. 

Although a business can continue to prepare accounts to a date other than 5 April, profits and losses will need to be apportioned to the tax year when completing the tax return. An exception is made where the period ends between 31 March and 4 April, in which case the period is treated as ending on 5 April for tax purposes. 

HMRC’s guidance in BIM81201 states that any apportionment “should generally be made in proportion to the number of days in the relevant periods” but that it will accept an alternative method “if it is reasonable and is applied consistently”. Guidance is also provided on the use of provisional figures where accounts could not be finalised before the tax return filing date.

Adjusting for personal expenditure

In October and early November 2025, HMRC sent an email to taxpayers who completed the self-employment pages in the 2023/24 tax return reminding them that tax relief should not be claimed for personal expenditure. The email followed a trial campaign in 2024 and was sent in the run-up to the 31 January deadline for submitting the 2024/25 tax return. 

In the email, HMRC explains that the taxpayer should “only deduct expenses that are wholly and exclusively for business purposes” and that, where there is both business and non-business use, a personal use adjustment may be required. HMRC also refers taxpayers to the guidance on simplified expenses on GOV.UK. 

The email highlights HMRC’s increasing focus on non-business expenditure and warns that, where the taxpayer fails to adjust their expenses for personal use, HMRC may open a compliance check and charge penalties. The email also explains how to amend a tax return for an earlier tax year, or make a disclosure in relation to it. HMRC says that the 2024 campaign generated over £27m in tax revenue and “highlighted reporting of disallowable private use in business expenditure”.

An earlier article explains how to apply the rules and highlights the categories of expenses that are more likely to need private use adjustments. 

Preparing for MTD income tax

The figures reported in the 2024/25 tax return will determine if the taxpayer is required to comply with Making Tax Digital (MTD) for income tax from April 2026. Where total gross income from the sole trade and any property business carried on exceeds £50,000, HMRC should write to the taxpayer and inform them that they need to sign up for MTD income tax.

However, there may be a delay in receiving a letter from HMRC as, where the return is submitted after August 2025, the letter will not be sent until February or March 2026. In addition, copies will not be sent to agents and, where the taxpayer meets the criteria but does not receive a letter from HMRC, it is still their responsibility to sign up for MTD income tax.