A self assessment tax return is where you tell HMRC about your income and expenses yourself. Tax is often deducted automatically from wages or pensions, but other types of income need to be reported using a self-assessment tax return. You need one if you’re self employed or have income outside of regular employment. In this article we explain who needs to file, how to register and how to do your tax return.

Quick Facts

• You need a self assessment tax return if you’re self employed, have rental income, have untaxed income etc.
• Keep accurate records of your income and expenses for self assessment and tools like spreadsheets or bookkeeping software can help.
• You have various payment options for your self assessment tax bill including Direct Debit and online banking, paying on time will avoid penalties and speed up your tax refund.
• While tax is often deducted automatically from wages or pensions, individuals with other types of income need to report this using a self-assessment tax return.

Understanding Self Assessment

Self Assessment is a system used by HM Revenue and Customs (HMRC) to collect Income Tax from individuals who have income that is not taxed through the Pay As You Earn (PAYE) system. This includes self-employed individuals, those with income from investments, rental properties, and other sources. Essentially, Self Assessment is a way for you to report your income from various sources, including self-employment, investments, and other income, and to calculate the amount of tax you owe.

If you are self employed, have income from rental properties, or earn other income that isn’t taxed at source, you will need to complete a Self Assessment tax return. This ensures that you pay the correct amount of income tax and avoid any penalties for underpayment. Understanding the Self Assessment process is crucial for staying compliant with HMRC regulations and managing your tax obligations effectively.

Who Needs a Self Assessment Tax Return?

Who needs to do a self assessment tax return is key to compliance. If you earn income in certain ways, such as self employed, you need to submit a tax return. Tax is often deducted automatically from wages or pensions, but other types of income need to be reported using a self-assessment tax return. This also applies if you have rental income, savings income above the allowance or occasional untaxed income.

Even if your income is taxed through PAYE, other income or circumstances may mean you need to file a tax return. Tell HMRC about any tax you owe, including income tax or capital gains tax to avoid penalties.

Knowing you need to do a self assessment tax return can avoid surprises. If you fall into any of these categories make sure you follow the right steps to meet your tax obligations.

Registering for Self Assessment

Once you’ve decided you need to do a self assessment tax return the next step is to register online and create a Government Gateway user ID so you can access HMRC’s services. Register by 5 October following the end of the tax year to avoid delays.

If you did a self assessment last year you don’t need to re-register. Use HMRC’s online tool if you’re not sure if you need to register.

Following these steps will get you set up for filing your tax return.

Preparing for Your Tax Return

Preparing for your tax return involves gathering all the necessary records and information to ensure that your tax return is accurate and complete. This includes:

Gathering Records and Information

• Bank statements and receipts for business expenses: These documents are essential for verifying your income and expenses, ensuring that you report accurately.
• Records of income from self-employment, investments, and other sources: Keep detailed records of all your earnings, whether from self employment, investments, or other income streams.
• Records of capital gains and losses: If you have sold any assets, you need to report the capital gains or losses on your tax return.
• Records of charitable donations and other tax-deductible expenses: These can help reduce your tax bill, so make sure to keep all relevant documentation.
• Guidance notes and supplementary pages for specific types of income or expenses: HMRC provides detailed guidance notes and supplementary pages to help you report specific types of income or expenses accurately.

It’s essential to keep accurate and detailed records to avoid errors on your tax return and to ensure that you are taking advantage of all the tax deductions and credits available to you. Proper preparation will make the process of completing your tax return much smoother and help you avoid any potential issues with HMRC.

Business Records

Accurate business records are key to self assessment. Self employed individuals should keep all business income records, including invoices and bank statements, to calculate profits accurately. Keeping detailed sales and income records is vital for a successful business and self employment.

Keep all business expenses to support your tax return. If VAT registered keep VAT records. File invoices securely and alphabetically or by date to avoid confusion. A separate business bank account will help with financial tracking.

Regular bookkeeping will avoid backlogs and keep records up to date. Use spreadsheets, bookkeeping software or physical records to manage. Accurate records are key to calculating profits or losses for tax returns.

Filling in Your Tax Return

Filling in your tax return involves completing the necessary forms and providing the required information. This includes:

• Completing the main self-assessment form (SA100): This is the primary form where you report your income and claim any tax reliefs.
• Completing supplementary pages for specific types of income or expenses (e.g., SA103S for self-employment income): If you have income from self employment, investments, or other sources, you may need to fill out additional pages to provide detailed information.
• Reporting income from all sources, including self-employment, investments, and other income: Ensure that you include all your earnings to avoid underreporting and potential penalties.
• Claiming tax deductions and credits for which you are eligible: Make sure to claim all the deductions and credits you are entitled to, as these can significantly reduce your tax bill.

It’s essential to ensure that your tax return is accurate and complete to avoid errors and penalties. Double-check all entries, especially expense and income figures, to ensure everything is correct before submission.

Your Tax Bill

Once you’ve submitted your self assessment tax return you need to understand your tax bill. Tax is often deducted automatically from wages or pensions, but other types of income need to be reported using a self-assessment tax return. A Self Assessment statement will show your tax liability and any payments made. The tax calculation will show the total tax due for the year.

If you overpaid tax it will be repaid with your return so you won’t need to make a separate claim. Choose how you want to receive your tax refund—bank transfer or cheque—on your return.

Filing your tax return early will get your tax refund quicker.

Payment Options for Self Assessment

You have various payment options for your self assessment tax bill to suit your needs. Options include Direct Debit, bank transfer, debit or credit card and cheque. Setting up a Direct Debit with HMRC can take up to 5 working days.

For quicker payments use online banking or Faster Payments which are processed same or next day. Cheque payments can take up to 3 working days.

HMRC’s app also allows you to pay through a bank’s app or online banking. Knowing these options will help you choose the best for you and your timescales.

Online Self Assessment Tax Return

Filing your self assessment tax return online is quick and has a deadline of 31st January which is also when tax is due. To have HMRC collect tax owed through PAYE file by 30th December.

Double check all entries especially expense and income figures. HMRC’s online tool will guide you through the process with prompts. HMRC also have video tutorials and webinars to help you understand Self Assessment.

Paper Forms

Instructions for paper form self assessment tax return are in the ‘How to fill in your tax return forms’ guide with the SA100 form. Updated forms and notes for 2023-2024 paper returns.

Send completed paper tax returns to the relevant HMRC address depending on whether you’re in the UK or abroad. Follow these instructions to complete and submit accurately.

Submission Options and Deadlines

Once you have completed your tax return, you can submit it to HMRC using one of the following options:

• Online submission through the HMRC website: This is the quickest and most efficient method, with a deadline of 31 January following the end of the tax year.
• Paper submission by post: If you prefer to submit a paper form, the deadline is 31 October.
• Submission through a tax return software: Various software options are available that can help you complete and submit your tax return electronically.

The deadline for submitting your tax return is typically 31 January following the end of the tax year. However, if you are submitting a paper return, the deadline is 31 October. It’s essential to ensure that you submit your tax return on time to avoid penalties and interest on any tax owed. By understanding your submission options and adhering to the deadlines, you can ensure a smooth and timely filing process.

Tax Refunds

To claim tax refunds for overpaid tax you need to complete specific forms and provide detailed information and evidence. For example use form R40 to claim refunds for overpaid tax on savings interest and send to HM Revenue and Customs. Non-residents use form R43 to claim personal allowances and tax repayments.

If you find an error on your tax return after the amendment deadline you can still claim a refund through overpayment relief within 4 years. Follow these steps to claim any refunds you’re entitled to.

Late Filing Penalties

Late filing of a self assessment tax return can be expensive so make sure you meet all deadlines. The initial penalty is £100 for missing the deadline. After 3 months a daily penalty of £10 can be charged for up to 90 days capped at £900.

If your tax return is 6 months late a penalty of 5% of the tax owed or £300 whichever is higher is applied. If your return is 12 months late the penalty is 5% of the tax owed or £300 whichever is higher.

Knowing these penalties makes it clear why it’s so important to submit and pay on time.

Personal Pay and Tax Records

Keep personal pay and tax records for accurate self assessment tax returns. Keep all relevant records including bank statements, receipts and self employed income details. Once submitted keep a copy of your completed tax return and the HMRC confirmation message.

Keep these records and you’ll have all the information you need on your tax return and to support your claims if needed.

Free Resources and Help

There are various free resources and help available to complete your self assessment tax return. HMRC have introductory guidance on topics like Capital Gains Tax and rental income tax. Guidance notes for specific sections of the tax return including detailed helpsheets are available from HMRC.

You can appoint an accountant or a trusted person to help you with your tax return. For general enquiries contact HMRC. Use these resources to complete your self assessment tax return accurately and efficiently.

Conclusion

Completing a self assessment tax return is straightforward if you know who needs to file, register correctly, keep accurate records and follow the right steps for filing and payment. Use the resources and meet the deadlines and it will be stress free.

Remember, being organised and informed makes all the difference. Follow this guide and you’ll be fine with your self assessment tax return and avoid any penalties.

FAQs

Who needs to file a self assessment tax return?

Self employed, rental income, savings above the allowance or any untaxed income you need to file a self assessment tax return. This is to comply with tax regulations for individuals with multiple income sources.

How do I register for self assessment?

You need to register online by creating a Government Gateway user ID and make sure the process is completed by 5th October after the tax year end.

What records do I need to keep?

You need to keep records of all business income and expenses including invoices, bank statements and receipts for your self assessment. This will help with accurate reporting and compliance.

What are the penalties for late filing of a self assessment tax return?

The penalties for late filing of a self assessment tax return start with a £100 fine for missing the deadline. If the return is more than 3 months late further penalties will apply.

How do I claim back overpaid tax?

To claim back overpaid tax, fill in the relevant forms, such as form R40 for overpaid tax on savings interest and provide full details and evidence of the overpayment. This will get your excess tax back.