Self Assessment is a system which HMRC use to collect tax. You’ll normally need to submit a Self Assessment tax return if you run your own business, or if you receive income from another source and haven’t already paid tax on it.
If your only source of income is a salary which you receive from an employer, then you won’t normally need to submit a Self Assessment tax return because your employer will deduct any tax you owe. They’ll pay this on to HMRC on your behalf using PAYE.
Do I need to submit a Self Assessment tax return?
You might need to submit a tax return for Self Assessment if you receive income which isn’t taxed automatically. For example, if you make an income from a sole trader business or side hustle, or if you rent out a property.
There are some exceptions to this though. The Trading Allowance means that you can earn up to £1,000 of self-employment income in a tax year before you need to tell HMRC or start paying tax on it.
Is Self Assessment just for self-employed people?
Self Assessment isn’t just for people who run a business. You might still need to register even if you’re not self-employed. For instance, if you earn more than £100,000, or if you’re a shareholder and receive money from dividend payments.
You may need to register for Self Assessment if you:
Earn more than £1,000 from self-employment as a sole trader
Are a partner in a business partnership
Receive dividend payments as a shareholder
Rent out a property
Receive other income from overseas, or from savings, investments, tips, or commission
Do I need to submit a Self Assessment return if I don’t make a profit?
Once you register for Self Assessment you’ll usually need to continue submitting returns unless you tell HMRC that you no longer need to, even if you don’t make a profit one year. You might receive a penalty if you don’t submit a tax return and HMRC are expecting one!
So, continue to submit your tax return, even if you don’t have any income at all to report, or if you make a loss. In fact, reporting a loss can be quite useful in other ways because you may be able to carry it forward to the following tax year, and offset it against any profits in order to reduce your tax bill!
How do I submit a Self Assessment return for someone who has died?
You can register for Self Assessment online using your Government Gateway account. It’s usually fairly straightforward, though the process is slightly different depending on whether you’re registering as a sole trader, or for another reason such as to register a partnership.
If you need to register for Self Assessment, the deadline to sign up is 5th October following the end of the tax year that you need to submit a return for.
What happens after I register?
HMRC will send you a Unique Taxpayer Reference (UTR) number within 10 working days. Keep this safe! You’ll need it each time you submit a Self Assessment tax return. It’s a good idea to set a reminder for submitting your tax return too.
You can complete your Self Assessment return online by signing in with your Unique Taxpayer Reference (UTR) number. The process starts with a series of questions about what type of income you need to report, designed to help you fill out the correct sections of the return.
If you prefer to submit a paper return you can download this and any supplementary pages from the HMRC website. The form will include instructions about where to send your form once it’s complete.
Which supplementary pages do I need to complete?
You can use the main Self Assessment tax return to report your income and to claim tax relief on your expenses, but if you submit a paper return you might also need to complete supplementary pages to tell HMRC about other types of income.
Record your tax residence status, and claim any allowances as a non-UK resident.
What information do I need to include on my Self Assessment tax return?
You’ll normally need to include the details of each source of income you received in that tax year, as well as information about any tax relief or allowances that you’re claiming against them.
This is one of the reasons why good bookkeeping is so important for businesses! Not only does it help you to monitor the financial performance of your business, but it also makes it much easier to provide the information you need for your tax return.
The deadline for submitting a Self Assessment return online and paying the bill is 31st January following the end of the tax year that the return is for.
If you need to submit a Self Assessment tax return for the 2022/23 tax year:
You can submit from 6th April 2023
The deadline to submit a paper return is 31st October 2023
The deadline to submit online and to pay your bill is 31st January 2024
What happens if it’s late?
Unfortunately, HMRC take a hard stance against overdue Self Assessment tax returns or late payments, so you’ll normally receive an automatic penalty as soon as it’s one day late. The penalty will increase if more time passes, and you might also need to pay interest on the unpaid tax. Ouch!
If you had a (very good) reason for missing the deadline, you might be able to appeal as long as you submit your request within 30 days of HMRC sending the penalty notice.
How much tax will I pay?
Your Self Assessment tax bill is made up of the income tax and National Insurance that you owe, along with any other types of tax you might need to pay, such as dividend tax. The amount of tax that you pay largely depends on how much you earn, and what type of income it is.
For instance, the income you earn from an employer is normally subject to income tax, but if you receive dividends, you’ll pay dividend tax on them at a different rate.
There are several ways that you can pay what you owe for Self Assessment, including through Direct Debit, making a transfer, paying with a card, or even through your tax code if you work for an employer.
If your tax bill comes to more than £1,000, you’ll be asked to make Payments on Account – an advance payment towards next year’s bill. The first of these advance payments is equal to half of this year’s bill, and shares the same payment deadline.
When do I need to pay my Self Assessment bill?
The deadline for paying your Self Assessment tax bill (and your first Payment on Account towards next years’ bill if this applies to you) is 31st January following the end of the tax year that the payment is for. The deadline stays the same, even if you submit your tax return much earlier or use a paper form.