Guide to Self Assessment Tax Returns.

If you’re employed you’ll have your income tax deducted from your earnings automatically through a process known as PAYE (Pay As You Earn). However, if you’re self-employed or have an income stream that isn’t taxed in this way, you’ll likely have to complete a self-assessment tax return.

Get the lowdown on everything you need to know about self-assessment tax returns with our guide.

What is self-assessment?

Self-assessment involves completing a tax return with information about your earnings and income so that HMRC can calculate how much tax you need to pay. It covers income tax, capital gains tax and national insurance.

Do I need to complete a self-assessment tax return form?

If you are self-employed, a partner in a business or make more than £1,000 a year from a side-hustle, you will need to complete a tax return.

However, even if you are employed and pay income tax through PAYE, there are a number of instances where you might also need to complete a self-assessment tax return. These include:

• Earning rental income from a property that you own
• Earning more than £100,000 a year
• Earning more than £10,000 from pensions or savings income
• Earning more than £2,500 in untaxed tips or commission 
• Realising gains over and above the capital gains tax allowance
• You or your partner claiming child benefit when either of you earns more than £50,000 a year
• Earning overseas income, or living overseas and receiving income from the UK

But your tax return isn’t just about paying tax. It can also be used to ensure you are getting the right amount of tax relief. For example, if you are a higher rate tax payer, you may only be getting basic rate tax relief on your pension contributions so you will need to claim the additional relief you are owed through your tax return.

How do I register for self-assessment?

If you haven’t previously completed a tax return or didn’t complete one last year, you’ll need to register for self-assessment with HMRC. There are different routes to register according to whether you’re self-employed, in a partnership or not self-employed.

Once you have registered you’ll be sent a Unique Taxpayer Reference UTR. You’ll also get instructions for setting up a Government Gateway account, which you’ll need to complete your tax return online.

What are the deadlines for self-assessment?

There are a number of key deadlines that you need to be aware of when you are completing a self-assessment tax return.

The deadline for:

• Registering for self-assessment is - 5 October (if you haven’t previously submitted a tax return)
• Submitting paper tax returns is – 31 October
• Submitting online tax returns is – midnight on 31 January
• Paying any tax you owe is – midnight on 31 January

Miss any of these deadlines and you may be charged a penalty and be charged interest on any late payments.

Gather your paperwork

Completing your tax return will be a whole lot easier if you have all the paperwork you need ready before you start.

What information do I need to complete my tax return?

To complete your self-assessment form, you’ll need:

• Your UTR or government gateway login details
• Your national insurance number
• Your P60 to evidence any income you have already paid tax on
• Details of untaxed income – from work, savings, investments or a rental property
• Details of your pension contributions (which you can find on your pension statement or by logging on to your online account if you have one)
• Details of contributions to charity that could be eligible for tax relief

How to complete your tax return

There are a variety of forms that you may need to complete as part of your self-assessment tax return.

The main part of the tax return is form SA100. This will ask you for information about the following areas:

• Income: this includes income from work as well as income from other sources including interest and dividends on savings and investments that aren’t held in ISAs or pensions. If you’re retired you’ll also have to declare your income from private pensions, the state pension and any annuity payments. You’ll also be asked whether certain benefits contribute to your overall income.
• Tax relief: you’ll be asked how much you have paid into private pensions and for details of charitable contributions to ensure you get the correct level of tax relief.
• Student and postgraduate loan repayments: if you are currently making repayments on these types of loans you’ll need to state how much your employer deducted from your salary.
• Child benefit: if you or your partner earn more than £50,000 a year and claim child benefit you’ll need to pay the High-Income Child Benefit Charge.
• Marriage allowance: if your income was below £12,570 for the year, you may be able to transfer £1,260 of your personal allowance over to your spouse to reduce the amount of tax they pay. To qualify your spouse needs to be a basic rate taxpayer.

As you go through your tax return online, HMRC provides guidance on how to answer the questions. It’s a good idea to read these first to ensure you complete the form correctly.

You can also download help sheets from HMRC.

In some cases you may need to complete additional forms known as ‘supplementary pages’.

These include:

• SA102 – for employees or company directors
• SA103S or SA103F – if you’re self-employed
• SA105 – if you receive property income
• SA106 – if you have overseas income or gains
• SA108 – if you have made capital gains
• SA109 – if you have dual nationality or a non-UK resident

Thankfully when you complete your tax return online, you’ll be provided with all the relevant questions you need to answer, based on the information you supply.

When you complete your tax return online, you don’t have to do it in one go. You can save your progress and come back later.

How to submit your tax return

Once you have completed your tax return online – it’s simply a case of clicking to submit it to HMRC. But, before you do, it’s a good idea to go back and check everything to ensure you haven’t made any mistakes or missed anything out.

You can fill out a paper tax return if you prefer and post it to HMRC. But remember paper returns have an earlier deadline (31 October), so if you are reading this in the New Year, a paper return will no longer be an option.

Paying your tax bill

The beauty of filing tax returns online is you’ll be told how much tax you need to pay straight away.

If you are self-employed you’ll also be told how much national insurance you need to pay.

There are a number of ways you can pay, including:

• Online or phone banking
• With a debit or corporate credit card
• In a bank or building society branch
• Through CHAPS (Clearing House Automated Payment System)

Payments on account

Confusing matters, you’ll be asked to make a payment on account when you pay your self-assessment tax. The exceptions being if you’ve already paid 80% of the tax you owe, or your last bill was for less than £1,000.

Making payments on account involves making two payments towards your tax bill in advance. 

Payments are due on the 31 January and the 31 July and each payment will be half of your bill from the previous year. If you end up needing to pay any more a balancing payment will be charged and will be due by the 31 January the following year.

What if I can’t pay my tax bill?

Sometimes your tax bill can come as something of a shock and can cause problems if you haven’t set money aside to pay it.

If you are struggling to pay your tax bill, you can apply to pay it in installments and set up a payment plan, where you and HMRC agree how much to pay each week or month. This is known as a ‘Time to Pay’ arrangement.

It’s important you don’t ignore the problem as HMRC will take steps to recover the money including using debt collectors or deducting money directly from your pension or wages.

Tax return common mistakes

There are a number of common mistakes people make with their self-assessment tax returns. These include:

• Failing to claim tax relief: if you don’t mention all your pension contributions and charitable contributions you miss the opportunity to reduce your overall tax bill
• Forgetting about your allowances: your personal allowance for income tax will be applied automatically, but there are other allowances you’ll need to tell HMRC you’re using. These include the Marriage Allowance, Blind Persons Allowance and the Rent A Room Scheme. Do your research first to ensure you don’t end up paying more tax than you need.
• Not claiming for expenses: if you’re self-employed, it’s important to research all of the allowable business expenses you can use to offset your tax bill. These include your office costs (even if you work from home), travel expenses, bank and insurance costs as well as money you spend on advertising and marketing. See the full list here. If you own a rental property there are also a range of allowable expenses you can claim.
• Not being aware of tax return deadlines: miss a deadline for filing your tax return and paying any tax owed and you could be hit with a fine and interest on your payments.
• Leaving it to the last minute: Most mistakes can be avoided by allowing yourself ample time to complete your tax return – this will give you time to find out about allowances, check your expenses and pension contributions and makes you less likely to rush your return and gloss over sections that could reduce your final tax bill.