For as long as you're self-employed you'll need to fill in a tax return each year. When filling in the forms you'll need to take into account the various expenses and allowances, to be able to work out an accurate figure based on your company's taxable profits. Broadly speaking your taxable profits are your yearly profits minus the cost of any business expenses or capital investments.
Self-employed Tax Period
The profits are worked out over an accounting period of twelve months, which you can choose if you want to. Most people opt to run their accounting period in-line with the tax year (April – April) as it can makes things simpler. However you may wish to specify a period to suit your own circumstances, such as the flexibility to manage your pension contributions to reduce your yearly bill, or simply spacing more time between the account year and the tax year to give yourself more longer to prepare.
For the first year, you will be taxed on profits from the date you started to the end of the tax year, and as such it may not be a full 12 months. In the second year you will likely be taxed on profits for 12 months to the accounting date that tax year. After that you can then submit normal 12 monthly returns, running between your accounting periods.
Each tax year runs from 6th April to 5th April so your taxable profits will be calculated based on your launch date to the 5th April that tax year, and reported to HMRC. Deadlines for submission are 6-9 months after the tax year has finished, currently specified as 31st October for postal returns, and 31st January for online assessments. The tax office expect monies owed to be paid by that same January date, but there are benefits for filing it sooner; if you owe no more than £3,000, are paid a salary or pension, and file your return by December 30th, the tax can be collected in the instalments through the PAYE system.
Payments on Account
After your first full year of business, on top of the tax paid for the year that has ended, you're also expected to pay tax for the current year in two instalments. This is known as 'payments on account'
The first payment would be due on 31st January, and is normally half the amount of tax you paid over the previous 12 months. The same amount will then be due as the second instalment on the following 31st July. Assuming that you make more than you did in the previous year, a third instalment, known as a 'balancing charge' would then be due on the following 31st January. On the other-hand, if you make less than previously, you get a refund and future payments are reduced accordingly.
If you think profits will be less than last year, you can get the payments on account instalments reduced. However if a higher figure is due, you will be charged interest on the difference. This is probably not desirable, and conversely is you pay the original specified amount and it turns out to be too much, you'll receive interest on the surplus from HMRC.
If you make a loss over the year, you can offset the loss by carrying it forward to deduct from future profits for the following year. Alternatively, you can use it to reduce your income tax bill (and sometime capital gains tax), for either the current or previous tax year.