Many self-employed people and businesses offload their tax duties to accountants who are trained to trawl through the details of invoices, tax bills, and other such financial documents. However, there are still plenty of people who simply don't have the funds to pay for an accountant and must, therefore, complete their own Self Assessment tax returns.
While the prospect of this can seem daunting at first, filing a return is a relatively simple process as long as you have all of your own records in order and they are easily accessible. It is also important to adhere to all of the necessary deadlines, as failure can result in substantial fines.
So who needs to complete Self Assessment tax returns? How do you register for and then complete returns? And when are the deadlines for the various submissions?
We are going to answer all of these questions and more as we explore all you need to know about Self Assessment tax returns.
Self Assessment is a tax collection system for self-employed sole traders and businesses to pay taxes on their income and for individuals who have other sources of income that are untaxed. Those who are required to use the Self Assessment system must complete a tax return that outlines their annual income and submit it to HMRC.
If you fail to complete a tax return and are required to do so, or if you knowingly file an incorrect return, then you are liable to be prosecuted. If you make an honest mistake on your return, you can make changes (see below) to your submission.
So let's jump in and take a look at who exactly needs to complete a Self Assessment tax return.
You need to send HMRC a Self Assessment tax return if, at any point in the last tax year (April 6th to April 5th), you were either:
- a self-employed sole trader, and you earned more than £1,000 pre-tax
- a partner in a business partnership.
You may also need to see one if you receive untaxed income, such as:
- a COVID-19 grant or support payments
- money from property letting
- tips or commissions
- income from savings, investments and dividends
- foreign income such as interest payments from a foreign bank account.
You can also send off a tax return to claim certain taxes back. For example, tax returns can also be used to:
- claim Income Tax relief
- prove you are self-employed and are therefore able to claim Tax-Free Childcare or Maternity Allowance
If you are unsure if you need to send a Self Assessment tax return, you can find out by using the checker on the government's website.
If you did not send a Self Assessment tax return last year and you need to send one this year, you will need to register first.
The process of registration slightly differs depending on if you are:
- a self-employed sole trader
- not self-employed
- registering a partner or partnership in a business.
In each situation, you can begin the process of registration by setting up an account with HMRC.
The deadline for registration, in each case, is October 5th in the tax year following the second tax year in which your business has operated.
If you are entirely new to Self Assessment, you will need to keep records of your accounts so that you can complete your return correctly.
Once have registered, you will receive a ten-digit Unique Taxpayer Reference (UTR), which you will need for future reference.
If you are self-employed and you did not register for a tax return last year, you need to register for:
- Self Assessment
- Class 2 National Insurance
You can register for both on your HMRC account. Once you have registered, you will receive your UTR number and notifications for when you need to make tax payments.
Filling out your tax return is simple, and the HMRC website has help to guide you through every step of the way.
Before you start filling out your return, make sure you have:
- your ten-digit Unique Taxpayer Reference (UTR)
- your National Insurance number
- details of your untaxed income from the tax year, including income from self-employment, dividends and interest on shares
- records of any expenses relating to self-employment
- any contributions to charity or pensions that might be eligible for tax relief
- P60 or other records showing how much income you received that you’ve already paid tax on.
There are two sections to a Self Assessment tax return: the SA100 (the main section); and the supplementary pages.
The SA100 deals with:
- income from dividends and interest
- pension contributions
- charitable donations
The supplementary pages deal with:
- company directors income
- foreign nationals and dual residents
- self-employed income
- income from property rentals
- Capital Gains
- income from abroad.
First, determine which sections are applicable to your situation and then follow the instructions on HMRC's website for filling out each part.
Once you have successfully registered, you can choose to then either send your return online or to send it off using paper forms.
There are different deadlines for the two options:
- If you choose to file your return digitally, then the deadline is January 31st.
- If you choose to file your return using paper forms, then the deadline is October 31st.
You can send your returns digitally by logging into your account and filing them from there.
If you choose to send your returns using paper forms, then you should look up the address of your nearest tax office and send the forms there. Be sure to pay for a recorded delivery as you may be fined if your returns are lost in the post, and you end up missing the deadline.
If you need assistance filling out your forms, you can find out more about what help you can get here.
There are multiple methods you can use to pay your tax bill. Each method will take a different amount of time to process, so it is important that you factor that in to make sure that all of your payments are made on time.
Here we will take a look at all the different payment methods that are available and how long each one can take.
Same or next-day payments:
- online bank transfer
- telephone bank transfer
- debit or credit card payment online
- in person at your bank or building society.
3 working days:
- Direct Debit (if you have previously set up a Direct Debit with HMRC)
- cheque sent in the post.
5 working days:
- Direct Debit (if you have not previously set up a Direct Debit with HMRC).
You can opt to pay your tax bill in one payment or split it into two instalments.
If you choose to pay your bill in one payment, the deadline is January 31st the following year. For example, the deadline for paying tax for the tax year between 2021 and 2022 is January 31st 2023.
If you choose to pay your bill in two instalments, the first deadline is January 31st, and the second is July 31st.
Remember to allow time for the payment to process. This may mean that you need to send off your payment up to five working days prior to the deadline.
When are the deadlines for this year?
There are hard deadlines for registering for Self Assessment, filing your returns, and paying your tax bills.
These are the deadlines for registration, returns, and payments for the tax year 2021/2022.
|Register for Self Assessment||5th October 2022|
|Paper tax returns||31st October 2022|
|Online tax returns||31st January 2023|
|Pay your tax bill||31st January 2023|
|Pay second instalment of tax bill (if splitting the payment)||31st July 2023|
What is the penalty for a late submission?
If you are late to file your return or pay your tax bill, you will usually receive a penalty fine.
If your tax return is filed up to 3 months after the deadline, you will receive a fine of £100.
If you file a return later than 3 months after the deadline or if you are late to pay your tax bill, you will pay a fine that is based on how much you owe. You will also be charged interest on late payments.
You can use HMRC's checker to estimate your penalty for Self Assessment tax returns that are more than 3 months late or for late tax bill payments.
You also have the option to appeal against a penalty if you believe that you have a reasonable excuse.
How to change a return
If you have made a mistake on your tax return, you can make changes online up to 3 days (72 hours) after your submission.
However, the changes still need to be made before the January 31st deadline, so be sure to send your return off a few days prior to the deadline to allow for time to rectify any mistakes.
If you miss the deadline or need to make changes and 3 days have already passed, or if you need to make a change to your return for a different tax year, you will need to write to HMRC. Your return will then be updated based on your letter.
You can claim a refund up to 4 years after the end of the tax year it relates to.
What to include in a letter to HMRC
If you need to write to HMRC, you should address your letter to:
HM Revenue and Customs
In your letter you should include:
- the tax year in which you are making a correction
- why you think you have paid the wrong amount of tax
- how much you think you have over or underpaid
- proof that you paid your tax through Self Assessment for the year in question
- details of how you want to be repaid
- a signed declaration saying that the details you have given are correct and complete to the best of your knowledge.
Self Assessment tax returns inform HMRC as to how much tax an individual must pay on their income if they are a sole trader or business partner. You may also need to submit a tax return if you have another source of taxable income, such as interest payments or dividends. Tax returns can also be used to claim tax relief and rebates.