What is a self-assessment tax return and who needs to complete one?

Over 11.5 million people filed a tax return by 31 January this year. Miss the annual deadline and you could face a fine. Here we explain what you need to know about self-assessment.

You can submit your self-assessment tax return for 2023/24 at any time from the start of this new tax year on 6 April until the deadline on 31 January 2025.

A quarter of self-employed people say it takes them almost a week to fill out their return. And it is not only freelancers and contractors who need to fill out a tax return. It can seem a daunting task, but it doesn’t have to be difficult.

In this article, we cover:

• Who needs to fill out a self-assessment tax return?
• What are the key tax return dates to remember?
• What are the potential late tax return penalties?
• How do I fill in a self-assessment tax return?
• When do I pay my self-assessment tax bill?

Work out your take home pay after tax with our income tax calculator

What is self-assessment?

For most people, any money they owe the taxman is automatically deducted from their salaries via PAYE (pay as you earn) before you can get your hands on it. 

For self-employed workers, HMRC doesn’t know what tax you owe, so you have to tell them. You do this through the self-assessment system by submitting a tax return online or by post once a year.

Freelancers, contractors and small business owners legally have to do this and make two “payment on account” deposits in January and July (we explain more on this later). If you fail to do this, you face a late filing penalty.

The information on your tax return is then used to calculate your overall tax bill and whether you are due a refund or not. We have a much fuller guide on how exactly to fill in a tax return.

But it isn’t just the self-employed that need to fill out a tax return.

Who needs to fill out a self-assessment tax return?

The system is also for those who do pay tax through PAYE but need to declare their income for other reasons. This includes:

• Having additional sources of income (see below for examples)
• Making a loss on investments
• Claiming extra tax relief on their pension
• They need to pay back child benefit
• Making capital gains selling certain assets

If you think you might be overpaying tax, check out our article here: Ten ways to cut the tax bill.

What income do I have to declare?

You might have to file a return you have any other taxable income, such as:

• Income from savings, investments and dividends
• Money from renting out a property
• Tips and commission
• Foreign income
• Profits from selling things like shares or a second home

You also need to register for self-assessment if you are in receipt of certain benefits, so check first by visiting the government website. If you are still unsure, contact HMRC.

What are the key tax return dates to remember?

• 5 April : end of the tax year
• 6 April: start of the tax year
• 31 January: you need to file your tax return online and pay your tax bill
• 5 October: deadline to register for self-assessment (if you run a business, you have to do this in your business’s second tax year)
• 31 October: deadline for paper tax returns
• 31 July: Freelancers, business owner and contractor need to pay attention to “payments on accounts” dates in January and July
• 30 December: submitting your online return if you want tax collected through your wages or pension over the next year using your tax code

As soon as a tax year ends, you need to file your online tax return and pay any tax owed by the following January.

So the 2023-24 tax year ended on 5 April 2024. But 31 January 2025 is the tax return deadline for your online return and paying any money you owe.

Find out more about how to pay taxes as a freelancer.

What are the potential penalties?

There are penalties for the late filing and late payment of tax returns. Below, we outline the fines.

Late filing penalty

• Up to 3 months late: Automatic penalty of £100
• 3-6 months: A daily fee of £10 for up to 90 days (total penalty of £900).
• 6-12 months: 5% of tax due, or £300, (whichever is higher), on top of the penalties above.
• 12 months+: A further 5% or £300 penalty, in addition to the above, but HMRC may fine you 100% of the tax due.

Around 1.1 million taxpayers missed the final January 31 deadline in 2024, triggering automatic fines, according to HMRC.

Interest on late tax payments

As well as the above penalties, you will be charged interest of 2.75% on late payments of tax you owe.

Interest will be charged on both unpaid tax and unpaid penalties, so the costs can rack up quickly.

Making a mistake on your self-assesment tax return

You do get a chance to go over your return and correct any errors before you officially submit it.

REMEMBER: You can still make changes to your return up until the following year’s filing a self-assessment deadline.

So for the 2023-24 tax year you have until 31 January 2025 to amend mistakes on your return. Miss those deadlines and you have to write to HMRC about any changes.

To minimise any mistakes, read our step-by-step guide to filling in your tax return.

How to register

You need to register for self-assessment with HMRC before you can submit a return.

There are different ways to register depending on whether you are:

• Self-employed or a sole trader
• Not self-employed, but need to register because, say, you have become a company director or receive income from land and property
• A partner or business partnership

For the self-employed, you will be registered for tax as well as Class 2 and Class 4 national insurance contributions. 

I have never registered before

• Go to the HMRC Sign In page
• Click on the green “sign in” button
• On the next page, click on “create sign in details”
• Enter your email address
• Your Government Gateway account User ID will be emailed to you – this is where you manage the tax you owe online
• Your unique taxpayer reference (UTR) will be sent by post
• Another letter will be sent with an account activation code
• NOTE: while the activation code should arrive within 10 working days, don’t rely on it – leave extra time
• You can also register by post, just complete the form SA1 online, then print it out to post it

HMRC is phasing out paper returns under the Making Tax Digital scheme as part of plans to improve government digital services.

I have registered in the past

If you have registered in the past, you just need to re-register.

• Make sure you have your ten-digit unique taxpayer reference (UTR) to hand. This allows you to manage all your personal tax affairs online.
• You’ll find it on previous tax returns or letters from HMRC.
• Don’t worry if you’ve lost or forgotten your old UTR, you can always ask HMRC to tell you what it is.

Filling in your tax return

Here’s a checklist of what you need to have to hand when you register for self-assessment tax return:

• National insurance number
• Ten-digit unique taxpayer reference (UTR)
• Details of any untaxed income from the relevant tax year, be it from self-employment, interest on savings, dividends from shares, or renting out property
• Your P60 or other records showing what tax you have already paid on your income
• A list of expenses relating to self-employment that can be deducted to work out your taxable profit
• Notes of charitable or pension contributions 

A tax return is split up into two parts

1. The main section = income, pensions, charitable donations and benefits
2. Supplementary pages = for those who have income to declare from self-employment, property, investment gains, as a company director, a foreign national (or dual resident), or income from abroad

Expenses

If your annual turnover is below £85,000, you don’t have to itemise your expenses, you can just enter the total amount.

Above this figure and you have to enter an individual amount for each kind of expenses, plus a total at the end.

REMEMBER: all expenses must be related to your work.

You don’t need to send proof but you do need to keep records of your expenses for the five previous years – HMRC may require that you produce them.

When do you have to pay your self-assessment tax bill?

Once you’ve filed your tax return, you’ll get a bill for the tax you owe, known as the “balancing payment”.

• Online returns – you can see what you owe even before you press submit. You’ll also receive a final tax calculation online after filing a self-assessment return.
• Paper tax returns – the taxman will send your bill by post back to HMRC

What are ‘payments on account’?

There are two advance payments that you make towards your next tax bill – by midnight on 31 January and 31 July.

• This includes Class 4 NICs if you’re self-employed (Class 2 NICs are paid on 31 January following the end of the tax year).
• Each payment is half your previous tax year’s bill
• If your latest tax bill is more than the payments you’ve already made on account, you must make the balancing payment by midnight on 31 January of the following year
• You’ll also have to make your first “payment on account” at the same time, so make sure you’ve cash set aside

If it turns out that you’ve paid too much on account, HMRC will send you a refund.

What happens if my circumstances change?

There are a number of reasons why your financial situation might have changed, perhaps you have decided to go part-time or unexpectedly lost a major client.

If you know your tax bill will be lower than last year then you can ask HMRC to reduce your payments on account.

Don’t be tempted to do this as a way of putting off paying your tax bill. If you end up underpaying then you’ll be charged interest on the shortfall.

If you owe less than £3,000 and pay tax already via PAYE then you can settle your tax liability in instalments over 12 months.

REMEMBER: You need to file your self-assessment tax return online by 30 December and not 31 January.

Any tax owed will come out of your wages or pension via your tax code.

Tax return help: How to claim a tax refund

If you have overpaid income tax at the end of the financial year, HMRC will send you what’s known as a P800 tax calculation.

You can either claim your refund online, which takes five working days to receive the money, or you will automatically receive a cheque in the post, which will take 14 days.

Use an online calculator to check how much income tax you should have paid.

How will it affect payments on account?

If you pay less than £1,000 tax for self-assessment there is no 50% required immediately and then 50% in July.

“If your income is higher in a given tax year, which triggers the payments on account, you are able to reduce those to a lower figure or nil if you do not expect to have the same level of profits next year.

“For example if it is a one off profit in a given year. You can elect to do this on your tax return”, says Neil Lancaster a partner at Blick Rothenberg.

Read more: Do I need to pay tax on my side hustle? The crucial £1,000 tax rule