SELF-ASSESSMENT TAX RETURNS IN THE UK: EVERYTHING YOU NEED TO KNOW

Self-Assessment Tax Returns in the UK: Everything You Need to Know

Self-Assessment Tax Returns in the UK: Everything You Need to Know

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If you’re self-employed, a landlord, or have income outside of regular employment, filing a self-assessment tax return in the UK is likely something you need to be familiar with. The self-assessment system enables HM Revenue and Customs (HMRC) to calculate your tax liability based on your income outside of regular employment. Here’s a guide to help you understand the process, deadlines, penalties, and tips to make filing your return easier.

What is a Self-Assessment Tax Return?


A self-assessment tax return is a system the UK government uses to collect Income Tax from people whose income isn't automatically taxed at source. While PAYE (Pay As You Earn) applies to most employed individuals, self-assessment covers those who have income from various sources, such as:

  • Self-employment or freelance work

  • Rental income from property

  • Interest and dividends from savings or investments

  • Income from abroad

  • Capital gains on the sale of assets


Each tax year (from 6 April to 5 April), individuals report their earnings, expenses, and allowable deductions. HMRC then calculates the tax due based on this information.

Who Needs to File a Self-Assessment?


Not everyone needs to submit a self-assessment tax return. However, you should file if you:

  1. Are self-employed or a sole trader with earnings of over £1,000.







    1. Earn more than £2,000 from dividends if you’re a shareholder.

    2. Receive income from property rental.

    3. Have annual income over £100,000.

    4. Need to pay Capital Gains Tax.

    5. Have foreign income or work overseas.

    6. Want to claim certain tax reliefs, like contributions to charity.


    It’s crucial to check with HMRC if you’re unsure about your eligibility, as failing to file on time can lead to penalties.

    Key Deadlines for Self-Assessment Tax Returns


    The UK tax system is strict about deadlines, so staying on top of these is essential to avoid fines:

    • 5 October: Register with HMRC if it’s your first time filing.

    • 31 October: Deadline for paper returns.

    • 31 January: Deadline for online returns and payment of any tax due.

    • 31 July: Deadline for the second “payment on account” (more on this below).


    If you miss these deadlines, HMRC can impose penalties, which can grow based on how late your submission is.

    Penalties for Missing Deadlines


    HMRC imposes a penalty of £100 if your return is up to three months late. After that, penalties increase:

    • After 3 months: £10 per day, up to a maximum of £900.

    • After 6 months: Additional 5% of the tax due or £300, whichever is greater.

    • After 12 months: A further 5% of the tax due or £300.


    To avoid these fines, set reminders for deadlines, and consider using an accountant if you're unsure about the process.

    Payments on Account


    If your last tax bill was over £1,000, HMRC might require you to make advance payments called "Payments on Account." These are two additional payments on 31 January and 31 July, each representing 50% of the previous year’s tax bill. When you file, any difference between your payment on account and the actual tax owed will be reconciled.

    How to File Your Self-Assessment Online


    Here’s a simple breakdown of the online filing process:

    1. Register for self-assessment on the HMRC website if it’s your first time. HMRC will send you a Unique Taxpayer Reference (UTR) and an activation code.

    2. Log in to the HMRC website and enter your income, expenses, and any applicable tax reliefs.

    3. Review the calculation of tax due provided by HMRC.

    4. Submit the return before the deadline and make arrangements for payment.


    Many people choose to work with an accountant to ensure everything is accurate, as mistakes can lead to further delays and penalties.

    Tips to Make Filing Easier



    • Keep Records Throughout the Year: Keeping organized records of your income, receipts, invoices, and expenses will simplify the process and help you maximize any deductions you’re entitled to.

    • Set Aside Money for Tax: Set aside a portion of your earnings for tax to avoid scrambling for funds when payment is due.

    • Utilize Accounting Software: Many online platforms simplify tax management for self-employed individuals and landlords, tracking expenses and generating reports automatically.


    Deductions and Reliefs You Can Claim


    Self-employed individuals and landlords can reduce their tax bills through allowable expenses, such as:

    • Business expenses: These include office supplies, travel expenses, and any professional memberships.

    • Home office expenses: If you work from home, you may be able to claim a portion of your household bills.

    • Capital Allowances: For those with large equipment or business assets, capital allowances provide tax relief on these expenses.

    • Pension contributions and charitable donations: Contributions to registered pensions or charities can also reduce your tax bill.


    Knowing which expenses to claim can reduce the overall amount of tax due, making your self-assessment manageable.

    Final Thoughts


    Filing a self-assessment tax return may seem daunting, but it doesn’t have to be. By understanding your obligations, staying organized, and marking your calendar with key dates, you can ensure a smooth process and avoid unnecessary penalties. If you’re unsure, seek professional help from an accountant who can provide personalized advice based on your income sources.

    Managing your taxes effectively will not only keep you compliant with HMRC but also allow you to focus on growing your business or investments.





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