Self-Assessment Tax Returns
A complete beginner's guide to understanding Self-Assessment tax returns, who needs to file one, important deadlines, and how to avoid common mistakes.
If you're self-employed, have income from multiple sources, or earn above a certain amount, you may need to file a Self-Assessment tax return. While it might sound daunting, especially if you're used to having tax deducted automatically through PAYE, Self-Assessment is actually quite straightforward once you understand the basics. This guide will walk you through everything you need to know.
What is Self-Assessment?
Self-Assessment is the system HMRC uses to collect income tax from people whose tax isn't automatically deducted at source. Instead of your employer calculating and paying your tax, YOU tell HMRC how much you earned and calculate how much tax you owe.
Key Differences from PAYE:
- • Tax deducted automatically by employer
- • Monthly payments
- • No forms to fill in
- • Can't claim many expenses
- • You report income and calculate tax
- • Pay tax once or twice a year
- • Annual tax return required
- • Can claim business expenses
Don't Panic:
Filing a Self-Assessment return is not as complicated as it sounds. HMRC provides an online system that guides you through the process step-by-step, and there's plenty of help available if you need it.
Who Needs to File a Self-Assessment Tax Return?
You must file a Self-Assessment tax return if ANY of the following apply to you:
If you're self-employed as a sole trader or in a partnership, you must file a Self-Assessment return, regardless of how much you earn. This includes:
- • Freelancers and contractors
- • People running their own business
- • Partners in a business partnership
- • Anyone who invoices clients for their services
You still need to file, even if your business made no profit or a loss. This is important for claiming losses against future profits.
If you receive rental income from property (before expenses) of £1,000 or more per year, or £2,500 or more from UK property if you don't register under the property allowance.
- • Buy-to-let landlords
- • People renting out a room (over the rent-a-room allowance of £7,500)
- • Holiday lets
- • Commercial property landlords
You need to file if:
- • Your income (or your partner's) is over £100,000 and you claim Child Benefit (you'll pay the High Income Child Benefit Charge)
- • You earn over £50,270 from employment and have other untaxed income
- • Your total income is over £100,000 (you start losing personal allowance)
You need to file if you have significant untaxed income from:
- • Savings interest over your Personal Savings Allowance
- • Dividends over the dividend allowance (£500 for 2025-2026)
- • Capital gains over the annual exempt amount (£3,000 for 2025-2026)
- • Foreign income over £2,000
If you're a director of a limited company, you usually need to complete Self-Assessment, even if you're paid through PAYE. This is especially true if you take dividends from your company.
- • You're a minister of religion
- • You receive income from a trust or estate
- • You have income from abroad that you need to pay UK tax on
- • You're claiming certain tax reliefs (like Marriage Allowance if you can't claim online)
- • HMRC has sent you a notice to file
Not sure if you need to file?
HMRC has an online tool to check if you need to send a tax return: gov.uk/check-if-you-need-tax-return. If in doubt, it's better to file than to miss the deadline and face penalties.
Important Deadlines You Must Know
Missing Self-Assessment deadlines results in automatic penalties, so these dates are crucial:
If you need to file for the first time, you must register by 5 October following the end of the tax year. For the 2025-2026 tax year (ending 5 April 2026), you must register by 5 October 2026.
If you're filing a paper return (not recommended - online is easier!), it must reach HMRC by midnight on 31 October. For the 2025-2026 tax year, the deadline is 31 October 2026.
This is the big one! Your online tax return must be filed AND any tax owed must be paid by midnight on 31 January. For the 2025-2026 tax year, the deadline is 31 January 2027.
- 1. Filing your tax return
- 2. Paying any tax you owe for that year
If you make payments on account (explained below), your second payment is due by 31 July. For the 2025-2026 tax year, the second payment is due 31 July 2027.
Penalty for Missing Deadlines:
- • 1 day late: £100 automatic penalty
- • 3 months late: £10 per day (up to £900)
- • 6 months late: £300 or 5% of tax due (whichever is higher)
- • 12 months late: Another £300 or 5% of tax due, plus potential investigation
- • Plus interest on any unpaid tax from 31 January
Don't miss the 31 January deadline! Even if you can't pay the tax, file the return to avoid the £100 penalty.
How to Register for Self-Assessment
If this is your first time filing, you need to register with HMRC first. This can take time, so don't leave it until the last minute.
- 1Go to gov.uk and register
Visit gov.uk/register-for-self-assessment and select the reason you need to register (self-employed, partner, etc.).
- 2Provide your details
You'll need your National Insurance number, address, and contact details.
- 3Wait for your Unique Taxpayer Reference (UTR)
HMRC will send your 10-digit UTR by post. This can take up to 10 working days, sometimes longer.
Important: Keep your UTR safe - you'll need it every time you file a return. - 4Activate your online account
Once you have your UTR, go to gov.uk/log-in-file-self-assessment-tax-return and set up your Government Gateway account. You'll receive an activation code by post (another 7 days).
- 5You're ready to file
Once your account is activated, you can log in and complete your tax return online.
Timeline:
Allow at least 3 weeks from registration to being able to file your return. This is why the registration deadline is 5 October - it gives you time to get set up before the 31 January filing deadline.
Understanding Payment on Account
This confuses a lot of people, but it's actually straightforward once explained.
If you owe more than £1,000 in tax, HMRC assumes you'll owe a similar amount next year. So they make you pay half of next year's estimated tax bill in advance - twice a year.
How it works:
- • 31 January 2026: Pay £4,000 (tax owed for 2024-2025) PLUS £2,000 (first payment on account for 2025-2026) = £6,000 total
- • 31 July 2026: Pay £2,000 (second payment on account for 2025-2026)
- • 31 January 2027: Pay any balance for 2025-2026, plus first payment on account for 2026-2027
Good News:
- • If you expect to earn less next year, you can reduce your payments on account
- • If you overpay, you get a refund (with interest)
- • If you're self-employed for the first time, you don't make payments on account in your first year
Watch Out:
- • The 31 January payment is often double what you expect (current year + advance payment)
- • You need to budget for both 31 January and 31 July payments
- • Reducing payments on account without good reason results in interest charges if you underpay
Common Mistakes to Avoid
The most common and costly mistake. Even if you can't pay the tax, file the return by 31 January to avoid the £100 penalty.
Set calendar reminders for October (start gathering documents), December (draft your return), and mid-January (file it). Don't wait until 31 January!
You must keep records of all business income and expenses for at least 5 years after the 31 January filing deadline. No records = no expense claims = more tax.
Use accounting software or spreadsheets, photograph receipts, save invoices digitally, and reconcile your bank statements monthly.
If you're self-employed, you pay Class 2 NI (fixed weekly amount) and Class 4 NI (percentage of profits). Many people forget to budget for this on top of income tax.
Your tax return calculates this automatically, but remember to budget around 9% of profits on top of your income tax.
Many self-employed people pay too much tax because they don't claim all the expenses they're entitled to (office costs, travel, professional fees, equipment, etc.).
Research allowable expenses for your industry, keep all receipts, and when in doubt, ask an accountant. Common claims include home office costs, mileage, professional subscriptions, and equipment.
First-time filers are shocked when they owe tax for the current year PLUS an advance payment for next year on 31 January.
Budget for 1.5x your annual tax bill by 31 January (current year + half of next year), and another 0.5x by 31 July.
Starting self-employment in April but not registering until January means you've missed the 5 October deadline and face penalties.
Register for Self-Assessment as soon as you become self-employed, receive untaxed income, or realize you need to file. Don't wait!
Getting Help with Your Tax Return
If your tax affairs are simple (just self-employment income and basic expenses), you can file your own return using HMRC's online service.
- • Sole traders with straightforward income
- • People with just one rental property
- • Simple investment income
- • No complex tax planning needed
For more complex situations, an accountant can save you money through tax planning and ensure everything is done correctly.
- • Limited company directors
- • Multiple income sources
- • Complex business structures
- • High earners wanting tax planning
- • Anyone who finds it overwhelming
Cost: Typically £150-£500 for a simple return, more for complex ones. Accountancy fees are tax-deductible!
Compare PAYE vs Self-Employment
Use our salary calculator to see how much tax you'd pay as a PAYE employee. This helps you compare what you're paying as self-employed vs what you'd pay in employment.
Calculate PAYE TaxKey Takeaways
- ✓File by 31 January (online) or 31 October (paper)
Missing these dates means automatic penalties starting at £100
- ✓Register by 5 October if it's your first time
You need your UTR and activation code, which take time to arrive by post
- ✓Payment on account means paying in advance
Budget for double tax on 31 January if you owe over £1,000
- ✓Keep records for 5 years
You need invoices, receipts, and bank statements to support your tax return
- ✓Claim all allowable expenses
Don't overpay tax - research what you can claim for your business
- ✓Get help if you need it
An accountant's fee is often less than the tax they save you