Five tax return hacks for contractors as Jan 31st looms

For most limited company contractors, the January 31st tax return deadline is one of the first HMRC thresholds that enters your mind at the start of every new year.

Standard tax return advice for 2026

Fortunately, the standard advice for filing your self-assessment tax return remains the same in 2026, writes Christian Hickmott, managing director of Integro Accounting.

And broadly, that age-old tax return advice is four-fold:

1. Keep accurate records.
2. Include all sources of income.
3. Use relevant accounting software.
4. Make sure you file on time.

However, some of the issues that cause the most friction at tax return time are still rarely mentioned in tax return guides.

So here are five self-assessment hacks for contractors that are tied to lesser-known issues — issues that still rear their head in the run-up to the January 31st deadline, with the effect of making the process of filing with HMRC more stressful than it needs to be!

1. Charitable donations: include them if you like paying HMRC less

If contractors have made donations to UK-registered charities under Gift Aid, don't forget to include them in the self-assessment.

Charitable contributions are massively important for tax efficiency because they can increase your basic rate tax band and reduce the amount of higher rate owed to HMRC.

Charitable contributions are an 'easy win' that many contractors overlook, especially if donations were made sporadically throughout the year.

So, if you did your bit for positive change in 2024-25, check your bank statements or charity receipts to make sure you claim what you're entitled to.

2. The £1,000 Trading Allowance: Ensure your SA100 factors it in

Many limited company directors earn small amounts of personal income outside of their company salary and dividends, such as occasional freelance consulting, coaching, or selling items online.

If you're a director of a limited company (also known as a PSC, or Personal Service Company ), and you've got such income on the side, then make sure you've not overlooked the £1,000 Trading Allowance.

Key to this HMRC exemption is the allowance itself and the corresponding threshold.

The Allowance: If your gross income is £1,000 or less in a tax year, you don't need to report it or pay tax on it.

The Threshold: Once your "side income" exceeds £1,000, you must declare it via the self-employment section of your tax return (SA100).

When this happens, if your 'side income' costs are less than £1,000, then you are better positioned to offset the Trading Allowance than your costs.

Remember though, against your side income stream, you can only claim either your costs or the Trading Allowance, not both!

Related, keep in mind that for digital platforms, there are new reporting rules. These HMRC rules are for channels like eBay, Etsy, or Vinted.

The effect of the rules is that if you have more than 30 transactions or earn over €2,000 (around £1,700) in business-related income, HMRC expects you to declare it. Avoid any temptation to underreport any 'side hustle' earnings.

3. Remember, umbrella company-only contractors aren't always exempt from self-assessment

Contractors working solely through an umbrella company are usually taxed entirely through PAYE and so usually don't need to file a tax return.

However, there are three exceptions which do pull umbrella-only contractors into self-assessment:

1. If you're affected by the High-Income Child Benefit Charge.
2. If you have untaxed income over HMRC thresholds.
3. If you have been issued a 'notice to file.'

Similarly in our eyes as a contractor accountant, a tax return is still required even with no PSC trading activity at all.

This need to self-assess even with nothing on the balance sheet often comes as a surprise, particularly to contractors who have moved between limited and umbrella company arrangements, and assume PAYE means their tax affairs are already taken care of.

4. File early to keep discrepancies and 'out-of-office' replies to a minimum

Filing early is often presented in those tax return guides we mentioned at the start as a way to beat the deadline and reduce stress.

Well, the more practical reason to not leave your tax return until the 11th hour is the importance of being able to access help — and hear back from the help — if something goes wrong.

It seems obvious that January is the busiest month of the year for accountants.

But more importantly, if a tax return issue arises on Wednesday, January 28th, there will be a limited time to investigate or correct it before the deadline of January 31st, which, be aware, this year falls on a Saturday.

Conversely, the same issue identified in mid-January is usually far easier to fix.

Submitting your tax return earlier gives you time to deal with unexpected queries rather than discovering them just before the deadline.

5. Know that a £100 late filing HMRC penalty can be just the start if you miss the 31st deadline

Most contractors are aware of HMRC's automatic £100 penalty for filing later than January 31st.

What is less well understood is that January 31st is also the payment deadline for any tax you owe.

If you miss the deadline, interest is charged on the outstanding balance at HMRC's current rate of 7.75%. On a £10,000 tax bill, that equates to £775 per year, accruing daily, which is why it's in your interests to file and pay HMRC on time.

The end of the first week of January is still an acceptable time to advise the following: if you are likely to have issues with paying, then raise this with HMRC as soon as possible.

A payment plan can be put into place.

And these payment plans have the edge on burying your head in the sand!

TLDR: 'Five tax return hacks for contractors…'

Whether you submit your tax return on your own or use an accountant, always follow the four pieces of well-established advice (listed at the outset) to avoid panic at the end of January. To recap, that's keep accurate records; include all income sources, use relevant software and file on time.

But steal some time, too, to review lesser-known issues. This guide has five hacks covering five of these lesser-known issues, as they can easily trip up contractors.

And finally, if you have any questions, ask an accountant — that's what they're there for.