What is Self Assessment?
Self Assessment is another system HMRC uses to collect income tax. If you are not employed and paid through the PAYE system, you use the self assessment process to tell HMRC how much you’ve earned. You must fill in a tax return form every year. This tells HMRC how much you earn, and if you have received money from other sources. HMRC will use your Self Assessment to work out how much tax you need to pay, and whether you are owed tax relief.
It is very important that you complete your tax return accurately. If you do not provide all the information, you may not pay the right amount of tax, and you could face a tax bill later or miss out on tax relief that is owed to you. There are Self Assessment penalties for incomplete or late returns.
On this page you will find information about:
Do I need to complete a Self Assessment tax return?
You need to complete a Self Assessment tax return if any of the following apply:
- you are self-employed
- you are a company director
- you own a business or part of a business
- you are employed and earn more than £100,000
- you have an income of £10,000 from property, or savings and investments (after tax), or £2,500 or more from property, savings or investments (tax-free)
- you are receiving income from the estate of a deceased person (if tax is still due on the estate)
- you are receiving money from overseas
- you are employed and you want to claim work related expenses of over £2,500
If you are over 65 and your income is over £24,000 you may also need to complete a tax return.
If two or more individuals are partners in a business, each person must register for Self Assessment and complete a tax return.
There are some other individuals who always need to complete tax returns, including people who underwrite insurers, and any minister of religion.
How do I register and get a Self Assessment tax return form?
To get a tax return form you need to register for Self Assessment with HMRC.
The easiest and quickest way to register for Self Assessment is online at the HMRC website. You can also write to HMRC to register for Self Assessment.
When you have registered for Self Assessment you can complete your tax return form on paper or online.
You can get help from HMRC with your Self Assessment form, or you can appoint a qualified accountant to complete the process on your behalf.
Can I register for Self Assessment on behalf of a company or trust?
If two or more individuals are partners in a business, each person must register for Self Assessment. However, in some circumstances (such as when the company or trust becomes a partner in another partnership) you may need to register a company or trust for Self Assessment. If this is the case, the secretary or trustee should submit an SA402 form, either online or print and send on paper.
What is a Unique Tax Reference (UTR) number ?
Your Unique Tax Reference (UTR) is a ten-digit number that is used to record all your direct tax transactions. You only need one UTR, and this will not usually change.
Not everybody has a UTR, but you need one to complete your Self Assessment tax return. A UTR number is not to be confused with a national insurance number. A UTR number is only issued if you register for Self Assessment or set up a limited company. It is important to keep your UTR number, as it will be needed when submitting your Self Assessment tax return and if you communicate with HMRC. It may also be called your ‘tax reference’ number.
How do I get a Unique Tax Reference (UTR) number?
If you have registered for Self Assessment your UTR will be included in communication from HMRC. It will also appear on your online Self Assessment tax return form. If you have completed tax returns in previous years your UTR will be included in communication from HMRC or the Inland Revenue.
If you do not already have a UTR you will be given one when you register for Self Assessment. In addition, anyone can apply for a UTR at their local tax office.
How do I complete my Self Assessment tax return online?
The best way to complete your tax return is online.
You have the benefit of secure encryption on the government website, and the whole process is quicker. Your tax is calculated immediately when you enter the information, you can print copies for your records, and you can make payments online if you wish.
When you first register for online Self Assessment you will be sent an activation code in the post. You need to enter this activation code into the website, then choose a username and password.
Can I complete my Self Assessment tax return on paper?
If you are unable to complete your tax return online, you can fill in a paper copy. You should request this from HMRC. There are a few circumstances when you must send a paper copy, such as if you are completing a tax return for trustees of registered pension schemes. The deadline to file a paper self assessment tax return is earlier than online filing. You must send paper returns by midnight on 31st October.
Self Assessment Tax return deadlines
The tax year ends on 5 April.
If you submit your individual Self Assessment online, the deadline is midnight on 31st January the following calendar year.
For example, in the tax year 6th April 2017 to 5 April 2018, the deadline to submit your Self Assessment online is by midnight 31st January 2019, and the deadline to submit a paper copy is by midnight 31st October 2018.
What if I submit my Self Assessment tax return late?
There are financial penalties if you are late submitting your Self Assessment tax return:
- If you are one day late, there is an automatic penalty of £100.
- For every day after, the penalty increases by £10, to a maximum of £1000.
- If you are six months late, the penalty increases by a further £300 or your tax bill may be increased by 5%.
- If you are one year late, this may increase by a further £300, and your tax bill may be increased by up to 100% in some cases.
What if I submit my tax return incorrectly?
It is very important that you complete your tax return carefully and accurately. HMRC has a system for deciding if errors on your tax return warrant a financial penalty.
If you have shown due care and attention, then there will be no fine at all.
If you fail to take reasonable care completing your tax return, you will be charged between 0%-30% of the extra tax you owe.
If HMRC believe that you have deliberately underestimate your tax, the fine is between 20%-70% of the extra tax you owe.
If you deliberately underestimate your tax and conceal the fact, the fine becomes between 30%-100% of the tax you owe. These penalties can be reduced if you tell HMRC about your mistake as soon as possible.
The sooner you tell HMRC about a careless mistake you notice after filing your return, the better the outcome regarding the size of the fine.
All fines are payable on top of your original tax bill.
Self Assessment Late Filing Penalties
If you do not submit your self assessment tax return on time HMRC will automatically charge you a late filing penalty.
The late filing self assessment penalties are:
- £100 fixed penalty. The fixed penalty is applied after one day, even if there is no tax to pay or if any tax due is paid on time
- Following 3 months in addition to the £100 fixed penalty, £10 per day will be charged up to a maximum of £1000.
- Following 6 months another penalty totaling 5% of the tax due or £300. Whichever is the greater of the two will be charged.
- Following 12 months a further 5% or £300 charge, whichever is the greater of the two. In extremely serious cases, you could be fined 100% of your tax bill, doubling the original amount.
Self Assessment Late Payment Of Tax
In addition to filing your self assessment tax return late you will have additional penalties if you do not pay any tax you owe on time. The additional late penalties for tax owed are:
- At 30 days 5% of any tax unpaid
- At 6 months 5% of any tax unpaid
- At 12 months 5% of any tax unpaid
Self Assessment Late Filing Penalties For Earlier Tax Years
HMRC introduced new penalties for self assessment on the 6th April 2011. If you have outstanding self assessment tax returns to complete for the 2008-2009 and 2009-2010 tax years then the old penalty rules usually apply. Late penalties under the old self assessment rules:
- £100 penalty for any late self assessment tax return
- If you do not owe tax any late penalty should not be enforced
Late Penalties for Late Payment of Tax
If you owe tax up to the 2009-2010 tax year interest will charged on any tax owed. Depending on your circumstances and in addition to any tax owed a further penalty could be applied called a surcharge. The amount of surcharge could be 1%, 2% or 5% of the tax owed.
How is my tax calculated?
The tax that you owe is calculated according to the information you provide in your Self Assessment. Your taxable income is calculated by working out your total income and subtracting tax-free allowances, interest, expenses and benefits.
Any tax you have already paid is taken into account. If you are self-employed, this also includes National Insurance contributions.
Different types of income are subject to different tax rates, and income above a certain level is subject to higher tax rate. If you have certain savings or assets you may also have to pay Capital Gains Tax.
You will receive a figure that states ‘total tax due’. This figure does not include tax owed from other years, or any money you may have already paid to HMRC for this year’s tax.
Do I need to check my tax calculation?
After you complete your Self Assessment, you may receive a statement giving your tax calculation. If you think that your tax calculation is incorrect, you should inform HMRC.
If you complete your Self Assessment online, the information will be given immediately and you will not usually receive a separate tax calculation. Your tax calculation shows all the income you receive before tax has been deducted, your income after deductions and tax-free allowances, and the total income tax due. If you are self-employed it also include National Insurance contributions.
The total income tax due includes adjustments for PAYE taxed earnings, tax paid on savings, and refunds you have received. It does not include payments you have already made this year or money you owe from previous years.
If you are employed or receive a pension, you should check that your PAYE tax code is correct. If your tax code is wrong you should inform HMRC as soon as possible.
If you open a business or become self-employed, it is important to keep proper records from the very start. Without these records you cannot complete an accurate tax return.
You should keep accurate records of your income and all business-related expenditure. This includes all sales, purchases and expenses. If you employ people in a business you need to keep full records of all PAYE transactions, including wages and deductions. If your business is VAT registered you need to keep full records of all VAT transactions.
In many cases there are legal requirements for you to keep certain records. Full details of these requirements are available from HMRC.
For further Tax information, please follow the links below:
Income Tax includes:
What is income tax?
How is Income Tax calculated?
How much income tax do I need to pay?
Income Tax Allowances
Income Tax Rates and Taxable Bands
How do I pay income tax?
Tax Codes includes:
Where do I find my Tax Code?
New Tax Codes
What does my tax code mean?
Different Tax Codes
More than one job
Emergency Tax Codes
Emergency Tax Codes includes:
What is an Emergency Tax Code?
What does an emergency Tax Code look like?
Why do I have a BR/ Emergency Tax Code?
Can I get a Tax Refund if I have paid Emergency Tax?
Construction Industry Scheme includes:
CIS For Subcontractors
CIS For Contractors (Employers)
VAT (Value Added Tax) includes:
What is VAT?
When do I pay VAT?
How much VAT do I need to pay?
Do I need to register for VAT?
How do I pay VAT?
Can I claim VAT back?
National Insurance includes:
What is National Insurance?
What are the different types of National Insurance?
Who pays National Insurance?
What is National Insurance used for?
Do your National Insurance payments affect your Pension and Benefits?
How much National Insurance should I pay?
Pension Tax includes:
Do I have to pay tax on my pension?
Do I have to pay tax on my state pension?
Corporation Tax includes:
Who needs to pay Corporation Tax?
How much Corporation Tax do I need to pay?
How do I pay Corporation Tax?
Inheritance Tax includes:
What is Inheritance Tax?
Capital Gains Tax includes:
What is Capital Gains Tax?