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Self assessment is a system that aims for some people who fulfil specified criteria to provide details of their income, expenses, allowances and tax reliefs to HMRC using a tax return. For many people in the UK who pay tax, the correct amount will be deducted directly from their salary through a tax code. Some people have more complex tax affairs, and it is these people who will be asked to complete a tax return through the self assessment system.

Who will be included in the self assessment system?

Anyone who has more complex tax affairs, even if they already pay tax through their tax code, will have to fill in a tax return. Some people will have to complete a return regardless of how complex their affairs are. For instance, anyone who is self-employed, a director of a company, in receipt of foreign income or a trustee must complete a self assessment tax return each year.

There are other criteria which will place a person in the self assessment system, including those who earn over £100,000 a year, savings or investment income that exceeds a specified amount, and those who wish to claim expenses or tax reliefs that exceed £2,500.

Registering for self assessment

If a person believes they may have to complete a self assessment tax return, they should register with HMRC. If HMRC considers that a tax return should be completed, they will issue a Unique Taxpayer Reference number and a tax return for the appropriate year. Register for self assessment as soon as your circumstances have changed so that you will pay the correct amount of tax at the right time. Failure to notify HMRC will make you liable to a penalty charge.

Completion of a tax return

There are two ways to complete and submit a tax return through the self assessment system; either complete and submit a paper copy or complete the tax return online. The deadline for a paper tax return is 31st October each year, while registering to complete a tax return online has a deadline of 31st January. If the deadlines are missed, you will be charged a fixed penalty, followed by further penalties for each day which the tax return remains outstanding. There are supplementary pages for tax returns – a page for each type of income. You can request these from HMRC. For complex tax affairs, many people choose to seek help from a professional.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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