The UK tax system can be complex, and understanding your tax obligations can be confusing. If you own a business or are self-employed, you may be required to complete a self-assessment tax return each year. In this article, we will provide a quick overview of what a self-assessment tax return is, list who needs to complete one, what to do if you’re unsure, and mention the support available. We will also briefly mention the deadlines for submitting your self-assessment tax return and penalties for late returns and payments.
What is a self-assessment tax return?
A self-assessment is not a tax in itself but a way of paying tax. A self-assessment tax return is an annual requirement for taxpayers in the UK to declare their income, gains, and other financial information to the HMRC. The onus is on the individual to self-assess if they need to complete a tax return, inform HM Revenue & Customs (HMRC) of the same and pay any tax due for a given year before a set date to avoid fines. The tax return covers the tax year from 6 April to 5 April of the following year. It aims to ensure taxpayers pay the correct amount of tax owed based on their income and other financial circumstances and claim any reliefs or tax allowances they may be entitled to.
Who needs to complete a self-assessment tax return?
The following people are required to complete a self-assessment tax return in the UK:
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Self-employed individuals
If you are self-employed and your income from self-employment was more than £1,000 in the tax year, you will need to complete a self-assessment tax return. This includes sole traders, freelancers, and contractors.
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Company directors
Company directors who receive income not accounted for under the Pay As You Earn (PAYE) system are usually required to complete a self-assessment tax return. This includes directors who receive a salary, dividends, or benefits in kind from the company. However, circumstances will vary, and it may be worth seeking assistance from a professional accountant to discuss your tax affairs, and what tax (if any) is due to be paid through the submission of a self-assessment.
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Landlords
Landlords who earn rental income from one or more properties are likely to be required to complete a self-assessment tax return. This includes those who rent out residential or commercial properties. Like self-employment, landlords are only required to submit a self-assessment tax return if income rental income exceeds £1,000 in a tax year.
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High earners
You will need to complete a self-assessment tax return if your income is over £100,000 per year. This includes individuals who earn a high salary, have significant investment income, or receive income from other sources.
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Those who have received income from abroad
You must complete a self-assessment tax return if you have received income from abroad that has yet to be taxed in the UK. This includes income from foreign investments, rent from a property abroad, or employment overseas.
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Those who have received income from savings or investments
If you have received income from savings or investments not taxed at source, you may need to complete a self-assessment tax return. This includes interest earned on savings accounts, dividends received from shares, and income earned from a rental property. However, the amount of tax owed will depend on what type of tax pater you are (e.g. higher earner or basic rate taxpayer).
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Those who have made a capital gain
If you have sold an asset that has resulted in a capital gain, you may need to complete a self-assessment tax return. This includes the sale of property, shares, or other investments. In most cases, you are required to complete a self-assessment if the gain is over the £6,000 threshold, or the proceeds are 4 times the threshold of £24,000.
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Trustees
You need to complete a self-assessment tax return if you are a trustee of a trust. This includes individuals responsible for administering the trust and managing its finances.
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Individuals who have received child benefits and earn over £50,000
If you or your partner received child benefits during the tax year and one of you has an adjusted net income over £50,000, you must complete a self-assessment tax return. This is because the high earner is required to repay some of the child benefit through the tax system.
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Non-UK residents with UK income
You will be required to complete a self-assessment tax return if you are a non-UK resident with UK income.
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Individuals with complex tax affairs
If you have other sources of income, such as foreign or pension income, you may need to complete a self-assessment tax return.
What should people do if they’re unsure whether they need to submit a self-assessment?
If you’re unsure if you need to submit a self-assessment tax return, you can use HMRC’s online tool to check. The tool will ask questions to determine whether you must submit a tax return.
How to register for a self-assessment return?
There are different ways to register for a self-assessment return for self-employed or sole traders, not self-employed and registering a partner or partnership. Firstly, you will be required to create a government gateway account for self-assessment.
How to send your self-assessment tax return to HMRC?
It can be posted to HMRC in paper form or submitted online.
What deadlines are associated with self-assessment tax returns?
It is important to adhere to the following deadlines associated with self-assessment tax returns set by HMRC. The dates below are for the tax year 2022-23. If you’re late, you may have to pay a penalty.
| Registration for self-assessment | 5 October 2023 |
| Paper tax returns sent by post | 31 October 2023 |
| Online tax returns | 31 January 2024 |
| Payment of tax owed | 31 January 2024 |
What fines are associated with self-assessment tax returns?
HMRC has become increasingly strict on deadlines and penalties for late filing of tax returns and late payments of tax due. Therefore, filing tax returns and paying any tax owed on time is important. If you think you won’t be able to pay the tax before a deadline, it is worth talking to HMRC and making structured payments. Please refer to the HMRC website to estimate your penalty for late filing of self-assessment and late payment of tax bills.
How can self-assessment tax bills be paid?
They are typically paid via direct debit or bank transfer. Payments via personal credit cards and at the post office are no longer accepted. A full list of acceptable payment methods is available on the HMRC website. It is important to know how long your mode of payment will reach HMRC to avoid penalties.
How to get help?
If you need help filling in your self-assessment tax return, help is available. You can appoint an accountant accredited in the UK to fill it in and claim all the deductions and allowances. An accountant or tax adviser can also help you understand your tax obligations and plan for the future. You can watch videos and seminars to guide you. You can also get help from HMRC’s digital assistant, general enquiries line and technical help for your online account. More information on all of these options is available on the HMRC website.