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Do I Have To Complete A Self Assessment Tax Return? A Clear Guide
If you are a taxpayer in the UK, you may be wondering whether you need to complete a self-assessment tax return. The answer to this question depends on a number of factors, including your employment status, income, and whether or not you have any other taxable income.
Self-assessment is a system used by HM Revenue and Customs (HMRC) to collect Income Tax. It is usually deducted automatically from wages and pensions, but if you have other taxable income, such as earnings from freelance work on the side, understanding what tax you should pay is crucial. The tax year runs from 6 April to 5 April the following year, and you must complete your tax return by 31 January following the end of the tax year.
If you are unsure whether you need to complete a self assessment tax return, you can find more information on the GOV.UK website. The website provides a comprehensive guide to self assessment, including who needs to complete a tax return, how to register for self assessment, and how to complete your tax return. If you are still unsure, you can contact HMRC for further advice.
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Who Needs to Complete a Self Assessment Tax Return?
If you are a UK resident, you may need to complete a Self Assessment tax return. The following subsections outline who needs to complete a Self Assessment tax return.
Self-Employed Individuals
If you are self-employed, you must complete a Self-Assessment tax return. This includes sole traders and partners in a business partnership. You must report your business income and expenses on your tax return. Understanding your expenses, such as business mileage and whether you can claim lunch as a business expense, is essential.
Company Directors
If you are a director of a limited company, you must complete a Self-Assessment tax return. You must report your income from the company, including any salary, dividends, or benefits you receive. Familiarising yourself with the benefits of paying corporation tax early can also be advantageous.
Partners in a Partnership
If you are a partner in a business partnership, you must complete a Self Assessment tax return. You must report your share of the partnership’s profits or losses on your tax return.
Individuals with Untaxed Income
If you have income that is not taxed at source, you must complete a Self Assessment tax return. This includes income from property rental, investments, and freelance work.
High Income Child Benefit Recipients
If you or your partner received Child Benefit and your income is over £50,000, you must complete a Self Assessment tax return. You may have to pay a tax charge, known as the High Income Child Benefit Charge.
Non-Resident Taxpayers
If you are a non-resident taxpayer with UK income, you may need to complete a Self Assessment tax return. This includes income from property rental, investments, and employment in the UK.
Registering for Self Assessment
If you are required to complete a self-assessment tax return, you must register for Self Assessment by 5 October in the tax year following the year in which you became liable to pay tax. If you fail to register on time, you may be subject to a penalty.
When and How to Register
You can register for Self Assessment online via the government website gov.uk. You will need to provide your personal information, including your name, address, and National Insurance number. You will also need to provide details of your income and any expenses you have incurred.
It is recommended that you register as soon as possible, even if you are not yet sure whether you need to complete a tax return. This will ensure that you have plenty of time to gather all the necessary information and complete your tax return before the deadline.
Unique Taxpayer Reference (UTR)
Once you have registered for Self Assessment, you will be issued with a Unique Taxpayer Reference (UTR). This is a 10-digit number that is unique to you and is used to identify you for tax purposes. You will need to use your UTR whenever you contact HM Revenue and Customs (HMRC) or complete your tax return.
It is important to keep your UTR safe and secure, as it is a confidential piece of information. You should never share your UTR with anyone else, unless you are sure that they are authorised to act on your behalf. If you lose your UTR, you can request a replacement from HMRC.
Important Deadlines and Penalties
Submission Deadlines
If you are required to complete a self-assessment tax return, it is important to be aware of the submission deadlines. The deadline for submitting your tax return online is 31st January following the end of the tax year. For example, the deadline for the tax year 2023/2024 would be 31st January 2025.
It is important to note that if you miss the deadline, you will be subject to penalties. These penalties increase the longer you delay submitting your return. Therefore, it is important to ensure that you submit your tax return on time.
Penalties for Late Submission
If you miss the deadline for submitting your tax return, you will be subject to penalties. The penalties for late submission are as follows:
- £100 if your tax return is up to 3 months late
- £10 per day for up to 90 days if your tax return is 3 to 6 months late
- £300 or 5% of the tax due (whichever is higher) if your tax return is 6 to 12 months late
- £300 or 5% of the tax due (whichever is higher) plus an additional penalty if your tax return is more than 12 months late
It is important to note that if you have a reasonable excuse for filing your tax return late, you may be able to appeal against the penalty.
Payment Deadlines
In addition to submitting your tax return on time, it is also important to pay any tax due by the deadline. The deadline for paying any tax due is also 31st January following the end of the tax year. If you miss the deadline for paying your tax bill, you will be subject to interest charges and penalties.
If you are self-employed, you may also be required to make payments on account towards your tax bill. Payments on account are advance payments towards your tax bill for the following year. The deadlines for making payments on account are 31st January and 31st July each year.
Completing Your Tax Return
Completing your self-assessment tax return can be a daunting task, but it doesn’t have to be. With the right preparation and understanding of the process, you can ensure that your tax return is completed accurately and on time.
Gathering Necessary Documents
Before you begin filling out your tax return, it’s important to gather all of the necessary documents. This may include your P60, which shows your income and tax paid for the year, as well as any documents related to interest, dividends, capital gains tax, rental income, savings, and pension contributions. Keeping accurate records of your expenses throughout the year will also be helpful when it comes to completing your tax return.
Reporting Income and Gains
When reporting your income and gains, it’s important to ensure that you include all relevant information. This may include income from employment, self-employment, and any other sources of income. You will also need to report any capital gains or losses from the sale of assets.
Claiming Deductions and Reliefs
Claiming deductions and reliefs can help to reduce your tax bill. This may include expenses related to your employment or self-employment, as well as any charitable donations you have made throughout the year. It’s important to ensure that you have accurate records of any deductions and reliefs you are claiming.
Calculating Tax Owed
Once you have reported all of your income and gains and claimed any deductions and reliefs, you will need to calculate the tax owed. This can be done using the HMRC’s online tax calculator or by completing the tax calculation section of your tax return. It’s important to double-check your calculations to ensure that they are accurate.
Paying Your Tax Bill
How to Pay
When it comes to paying your tax bill, it’s essential to ensure that you meet your obligations in a timely and accurate manner. You can make your payments through various methods, including direct debit, online bank transfers, or by cheque through your bank or building society. It’s important to understand the different options available to you to choose the most convenient and suitable method for your circumstances.
Budgeting for Payments
Budgeting for your tax payments is crucial to ensure that you have the necessary funds available when your tax bill is due. By accurately estimating your taxable income and understanding your tax liabilities, you can effectively plan and budget for your tax payments. This allows you to avoid any financial strain and ensures that you can fulfil your tax obligations without any issues.
Payment Options
Understanding the different payment options available to you is key to managing your tax bill effectively. Whether it’s setting up a direct debit for regular payments or making online or telephone bank transfers, choosing the right payment method can streamline the process and provide you with greater control over your tax payments. By exploring the available options, you can select the most suitable approach that aligns with your financial preferences and requirements.
Special Circumstances
If you have any of the following special circumstances, you may need to complete a Self Assessment tax return:
Non-UK Income
If you have foreign income that is not taxed in the UK, you may need to complete a Self Assessment tax return. This can include income from employment, self-employment, investments, and property. You should report your foreign income on the Foreign Income section of the tax return.
Capital Gains and Losses
If you have made a capital gain or loss in the tax year, you may need to complete a Self Assessment tax return. Capital gains can include profits from selling assets such as property, shares, and personal possessions. You should report your capital gains or losses on the Capital Gains section of the tax return.
Inheritance and Trust Income
If you have received income from an inheritance or trust, you may need to complete a Self Assessment tax return. You should report your inheritance or trust income on the Trust, Estate, Interest, and Dividends section of the tax return.
Getting Help and Support
If you’re struggling to complete your Self Assessment tax return, there are plenty of resources available to help you. Here are some options to consider:
HMRC Resources
The HMRC website is a great place to start if you need help with your Self Assessment tax return. You can find a wide range of resources on the site, including guides, videos, and webinars. You can also use HMRC’s online tools to help you calculate your tax bill and check if you’re eligible for any tax credits.
Professional Tax Advisors
If you’re dealing with complex tax issues, or you simply don’t have the time or expertise to complete your tax return yourself, you may want to consider hiring a professional tax advisor. A tax agent can help you navigate the tax system, ensure that you’re claiming all the tax deductions you’re entitled to, and help you avoid any potential pitfalls.
Dealing with Complex Issues
If you’re dealing with complex tax issues, such as overseas income, capital gains tax, or inheritance tax, you may want to consider seeking help from a specialist tax advisor. TaxAid is a UK charity that provides free, confidential advice on tax issues to people on low incomes. They can help you understand your tax obligations and ensure that you’re claiming all the tax relief you’re entitled to.
It’s important to be aware of potential scams when seeking help with your tax return. HMRC will never contact you out of the blue asking for personal information or payment. If you receive a suspicious email or phone call, you should report it to HMRC immediately.
Remember, completing your Self Assessment tax return can be a daunting task, but you don’t have to do it alone. There are plenty of resources available to help you, so don’t hesitate to reach out for support if you need it.
After Submission
Once you have submitted your Self Assessment tax return, there are a few things you should be aware of.
Receiving Your Tax Code
Your tax code will be updated automatically once HMRC has processed your tax return. You can expect to receive a new tax code within a few weeks of submitting your return. If you have not received an updated tax code within six weeks, you should contact HMRC.
Making Amendments
If you need to make any amendments to your tax return after you have submitted it, you can do so by logging into your HMRC online account. You can make changes to your return up to 12 months after the submission deadline. If you submitted a paper tax return, you will need to contact HMRC to make any amendments.
Handling Refunds or Additional Payments
If you are due a refund, you should receive it within four weeks of HMRC processing your tax return. If you have not received your refund within this timeframe, you should contact HMRC. If you owe additional tax, you will need to pay it by the deadline specified in your notice to file. You can pay online, by phone, or by post.
It is important to keep in mind that HMRC may adjust your tax return after it has been submitted. This could happen if they identify an error or if they need to make a correction. If your tax return is adjusted, you will receive a notice from HMRC explaining the changes.
If you need to cancel or withdraw your tax return, you should contact HMRC as soon as possible. They will be able to advise you on the next steps to take.