Self Assessment

Groucho Marx

"A child of five would understand this. Send someone to fetch a child of five."

What is Self Assessment?

Note - some aspects of self assessment are due to be replaced by Making Tax Digital for Income tax (MTDIT) from April 2026 - see our Making Tax Digital page.

Self Assessment is a system of tax administration used in the UK. It is based on taxpayers calculating their own tax bill as part of their tax return submission, rather than relying on assessments issued by the tax authorities as was historically the case. It includes a system of random and targeted checking by HMRC with penalties for errors or omissions.

HM Revenue & Customs reserve the right to open an enquiry into your tax return - see our Tax Investigations page.

You may not need to complete a tax return at the moment but you must be aware of the circumstances in which you would be required to complete a return. You cannot rely on HMRC to send you a tax return - it is your responsibility to file when necessary.

HMRC have an online tool to see if you need to file a tax return - see the link below :

https://www.gov.uk/check-if-you-need-tax-return

You will need to complete an annual tax return if you are self-employed, a partner in a business or if you have rental profits, overseas income and gains or other untaxed income.

If you are not UK tax resident you may need to complete a UK tax return to report any income or capital gains which arise in the UK.

If you are an employee, your employment income will be taxed under PAYE so you would not normally be required to complete a tax return. However, you may need to complete a return if you receive an additional source of untaxed income such as UK rental income or any income arising outside the UK.

If you are a higher rate taxpayer and have investment income - bank interest or share dividends - you may need to complete a return as this income will not have been taxed at source and you may be required to pay any balance of tax through self assessment.

Telling HMRC and tax return filing

New Income : If you are not already within self assessment you must notify HMRC of any new untaxed income by 5th October following the tax year in which it is first received.

New business : If you start a business you must register as self-employed if you are a ‘sole trader’ and earned more than £1,000 in the last tax year.

You need to register for both :

• Self Assessment

• Class 2 National Insurance

You must tell HMRC by 5 October following the tax year in which your business started.

Tax return filing.

You must file your tax return by January 31st following the tax year. The penalty for failure to do so starts at £100 and can be up to £1,600 - plus interest and further penalties on the late tax payment.

A penalty of £100 will always be due if your tax return is late. After the initial penalty, if you still don't file your tax return you will also be charged the following penalties :

• Over 3 months late - a daily penalty of £10 - up to £900 if this is higher

• Over 6 months late - an additional £300 or five per cent of the tax due if this is higher

• Over 12 months late - a further £300 or a further 5% of the tax due if this is higher.

Tax payments

The tax liability for each tax year is due for payment by the following January 31st. So tax due for the 2023/24 tax year (ended April 5, 2024) is due for payment by January 31, 2025.

Tax paid late accrues interest on a daily basis and there are also penalties for late payment of tax.

Payments on Account

If you have a tax liability to settle for 2023/24 under self assessment, you may also have to make payments on account for the 2024/25 liability.

Payments on account are based on the self assessment payment for the previous year and are payable in two instalments on January 31st and July 31st. For example -

2023/24 self assessment payment - due January 31, 2025 £5,840

2024/25 first payment on account - due January 31, 2025 £2,920

2024/25 second payment on account - due July 31, 2025 £2,920

You will not be required to make a payment on account if the previous year's self assessment payment was below £1,000 or if more than 80% of the overall tax liability was paid through PAYE or otherwise deducted at source.

What records are required?

You will not normally have to send accounts or other documents to HMRC as part of your self assessment return. However you must keep all of the relevant records for at least 22 months from the end of the tax year.

If you are self employed then you must keep your records for 5 years and 10 months from the end of the tax year to which they relate.

It is a legal obligation to keep proper tax records. HMRC have information on their website which will tell you exactly what records you need to keep, depending on your circumstances. See the link below :

https://www.gov.uk/keeping-your-pay-tax-records

If you are self employed, you have to keep more detailed records. HMRC expect you to keep -

• bank and building society statements or passbooks where the accounts are used for business transactions;

• a record of stock and work in progress at the end of each accounts period;

• a record of private money introduced into the business (and its origin);

• details of money or goods taken from the business for personal use;

• where a motor vehicle or property is used for both business and private purposes, a record to enable a split of expenditure to be made;

• a record of receipts under the subcontractors' scheme.

If you are not self employed (i.e. an employee) HMRC expect you to keep the following records, where relevant -

• details supplied by an employer about pay, tax deducted, benefits and expenses payments (e.g. forms P60, P45 (Part 1A), P11D, P9D)

• a record of tips or other receipts or benefits connected with an employment where records are not provided by the employer

• a record of state pension and other taxable social security benefits

• statements from banks and building societies about interest credited

• dividend vouchers

• particulars of purchases, sales and gifts of assets giving rise to chargeable gains.

Need Help?

Do you need help with any of the issues discussed on this page?

If you need assistance with UK tax filing we can complete and file a return for you with all tax calculations taken care of.

We can agree a fixed fee in advance.

Capital Gains

A disclosure of capital gains may also be required as part of the self assessment tax return. There is more information on our Capital Gains Tax page.

Opting out of Self Assessment

You must tell HMRC if you believe you no longer need to complete an annual self assessment tax return. If HMRC agree they will confirm by letter that you do not need to file a return unless your circumstances change.

You might no longer need to send a return because -

• your self-employment has ceased

• you no longer have rental income

• your income is below £100,000

Contact HMRC - there are details of the information they require at the link below -

https://www.gov.uk/self-assessment-tax-returns/no-longer-need-to-send-a-tax-return

Amending a Self Assessment Return

You can amend a tax return after it has been filed.

You can correct a tax return within 12 months of the deadline for that return. So for 2022/23 the filing deadline was January 31, 2024 and an amendment can be made any time up to January 31, 2025.

If you miss the deadline or if you need to make a change to a return from an earlier tax year you will need to write to HMRC.

Who is affected by Self Assessment?