Paying taxes is a legal duty in the UK, but understanding how to report them can be confusing especially if you’re filing for the first time. A Self Assessment tax return is HMRC’s system for individuals who receive income not automatically taxed at the source. This includes freelancers, landlords, company directors, investors, and anyone earning extra income outside traditional employment.
This expert-informed guide explains each step in a way that is both easy to understand and legally accurate, ensuring reliability and trustworthiness. It is built on HMRC’s official information and industry-recognised tax practices.
What Is a Self Assessment Tax Return in the UK?
A Self Assessment tax return is a legal form submitted to HMRC that details all your income for a specific tax year, including self-employment, rental income, dividends, investments, foreign earnings, and savings. HMRC then uses this information to calculate the Income Tax and National Insurance contributions you owe. For employees under PAYE, tax is automatically deducted by employers. However, anyone earning untaxed income must report it through the Self Assessment system.
Who Needs to File a Self Assessment Tax Return?
HMRC requires you to file a return if you meet any of the following criteria:
Self-Employed Individuals:
-
You are a sole trader earning more than £1,000 annually before expenses.
-
You operate as a partner in a business partnership.
Income Sources Beyond PAYE:
-
Rental income from property landlords.
-
Dividend payments or investment profits.
-
Income from side hustles such as freelancing, consultancy, tutoring, or online sales.
-
Foreign income or overseas commissions.
Other Circumstances:
-
You are a company director with untaxed income.
-
Your total taxable income exceeds £100,000.
-
You receive income from trust funds or estates.
-
You are claiming tax reliefs such as on pension contributions or charitable donations exceeding allowances.
Even if you are employed full-time, you may still need to register if you earn additional untaxed income.
Tax Year Structure and Deadlines
Understanding the tax year timeline is essential to avoid penalties.
| Period | 6 April to the following 5 April |
|---|---|
| Online filing deadline | 31 January after the tax year ends |
| Paper filing deadline | 31 October after the tax year ends |
| Tax payment deadline | 31 January (same as online filing) |
For example, for the 2024/25 tax year ending on 5 April 2025, your online deadline is 31 January 2026. Missing these dates results in penalties, regardless of whether you owe tax or not.
Step-by-Step: Registering for Self Assessment
1. Register with HMRC
Visit GOV.UK and complete the online registration form for Self Assessment. If you are self-employed, choose the "sole trader" category.
2. Receive Your UTR Number
You will receive a Unique Taxpayer Reference (UTR) number via post within 10 working days.
3. Set Up Your Government Gateway Account
This account allows you to log in and file your return online.
4. Activate Your Account
You will receive an activation code, which must be used within 28 days.
Once registered, you can access the Self Assessment portal and begin inputting your income and expenses.
What Documents Are Required to File?
Before starting your return, organise your financial information:
| Requirement | Examples |
|---|---|
| Identification | UTR, NI number |
| Income evidence | Invoices, bank statements, P60, P45 |
| Employment tax details | P60 (from employer) |
| Self-employment records | Sales reports, PayPal/Square reports |
| Expense proof | Business receipts, utility splits |
| Rental records | Lease agreements, maintenance expenses |
| Investment/dividend slips | Brokerage statements |
Keeping digital copies reduces errors and makes filing faster.
Completing the Tax Return: How It Works
-
Log in to Self Assessment via HMRC.
-
Select the appropriate tax year.
-
Enter your income details across all sources.
-
Add legitimate business expenses or reliefs.
-
Include pension contributions or allowable deductions.
-
Verify your tax calculation summary.
-
Submit your return to HMRC.
-
Pay your tax bill or payment on account by 31 January.
HMRC may request additional details if inconsistencies are detected, so accuracy is essential.
What Are Allowable Business Expenses?
For self-employed individuals, allowable expenses lower your taxable profit. HMRC permits you to claim costs that are exclusively for business purposes.
Examples include:
-
Office rent, internet, phone usage.
-
Marketing and advertising spend.
-
Mileage or transportation related to work.
-
Equipment, tools, and subscription software.
-
Professional fees such as accountants or legal advice.
Home-based workers can claim a portion of household bills like electricity and broadband if used for business.
How Are Taxes Calculated?
UK tax rates are progressive, meaning the higher your income, the higher the percentage you pay.
| Income Band (2024/25) | Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 – £50,270 | 20% (Basic rate) |
| £50,271 – £125,140 | 40% (Higher rate) |
| Above £125,140 | 45% (Additional rate) |
Self-employed individuals may also pay:
-
Class 2 National Insurance: If profits exceed £6,725.
-
Class 4 National Insurance: 9% on profits over £12,570 and 2% above £50,270.
What Is Payment on Account?
If your tax bill exceeds £1,000 and less than 80% of your tax is deducted at source, HMRC requires advance payments for the following year in two instalments:
-
50% by 31 January.
-
50% by 31 July.
A balancing payment may be due the following January if actual earnings exceed estimates.
Penalties and Fines for Late Filing
Failing to meet deadlines leads to immediate penalties.
| Time Lapsed | Penalty |
|---|---|
| Up to 3 months late | £100 |
| 3-6 months | £10 per day, up to £900 |
| 6-12 months | 5% of unpaid tax or £300 |
| Late payment interest | Added until cleared |
Filing Yourself vs Hiring an Accountant
| Self-Filing | Professional Help |
|---|---|
| Cost-effective | More costly but beneficial |
| Good for simple returns | Best for multiple income streams |
| Requires accuracy and confidence | Reduces risk of errors |
| Time-consuming | Saves time and ensures compliance |
Individuals with rental portfolios, partnerships, foreign income, or high earnings often benefit from professional tax support.
Best Practices to Keep on Track
-
Set aside 20–30% of untaxed income monthly.
-
Keep digital copies of receipts and invoices.
-
Use accounting tools like QuickBooks or FreeAgent.
-
Track expenses in real-time.
-
Register early to avoid account activation delays.
-
Review HMRC reminders regularly.
Frequently Asked Questions (FAQs)
1. Can I file a tax return even if I made a loss?
Yes. Reporting losses helps with future tax relief planning.
2. What if I registered late?
You must still file and may face backdated penalties unless you present a valid reason.
3. Is freelance income under £1,000 taxable?
Income under the Trading Allowance threshold (£1,000) is not taxable, but income above this must be declared.
4. How long should I keep my tax records?
HMRC recommends keeping records for at least five years after the return submission deadline.
5. Will HMRC notify me if I need to file?
Not always. Responsibility lies with the taxpayer to check eligibility.
Conclusion: Take Control of Your Taxes with Confidence
Filing a Self Assessment tax return in the UK may seem daunting initially, but with correct registration, accurate record-keeping, and an understanding of deadlines, it becomes manageable. Taking early action not only avoids penalties but gives you financial clarity and control. If uncertain, consulting a certified accountant can help you file correctly, claim allowable expenses, and stay compliant.