There are many articles out there that try to summarise the process of filing self assessment tax returns, however, as more and more content becomes available on the topic, more prior knowledge is sometimes assumed. This can make it difficult for people to make sense of the information being presented, especially if they’ve never completed the process before or require extra support to ensure they’re filling it out correctly!
Within this guide, we’ve laid out the process in a simple step-by-step guide to help fill in the blanks and provided extra resources to answer your queries. Our teams are also on hand to support you with your submission – find your nearest branch or call our team.
What Is A Self Assessment Tax Return?
In simple terms, a self assessment tax return is a way for self-employed individuals to report income to HMRC and calculate how much tax they need to pay when the income has not been taxed at source (i.e. before it reaches their bank account). It’s most commonly used by contractors, freelancers, business owners, property owners, and people who have multiple streams of income where the combined income from all sources (minus allowable business expenses) exceeds the personal annual allowance of £1,000. Learn more on the Government website.
Please also note that despite the name “self assessment,” an accountant can complete the submission on your behalf.
Who Needs To Fill In A Self Assessment Tax Return?
For most people who are in permanent employment, their work’s payroll system will ensure the tax is filed on their behalf and it will be deducted from their pay each pay cycle so there is no further action to take. However, for individuals who are self-employed or receive additional income from sources alongside their regular work, this money also needs to be taxed providing it’s above the £1,000 tax-free threshold for money earned from self-employment.
Examples of taxable income can include:
- Freelance work or “side hustles” such as tutoring, babysitting, consulting, cleaning, and other services for which you charge fees to clients.
- Selling online, including profits from selling second-hand clothes or items on marketplaces such as Facebook Marketplace, eBay, Depop, and Vinted.
- Rental income on property in the UK or abroad, including income from Airbnb, SpareRoom, buy-to-let properties, or holiday rentals.
- Investment income, including profits from dividends, stocks and shares (excluding ISAs), and other types of capital gains and interest.
To check whether you need to submit a self assessment tax return this year, use this tool on the Government website which will ask you 11 short questions to verify your tax status across all eligible categories of the tax return. (Please note using this tool will not submit data to HMRC and is solely for information and support.)
How To Submit Your First Self Assessment Tax Return
If you’ve never submitted a self assessment tax return before, you will need to register with HMRC to indicate that you will be submitting annual returns going forward.
To register, head to https://www.gov.uk/register-for-self-assessment. Once you complete the process, you will be sent your Unique Taxpayer Reference (UTR) via email or post. You will also need your National Insurance Number (you can check your NI number or request one via the Government website).
Once you have received these, you can log into the self assessment tax return portal which is accessible via Government Gateway. You will need to log in using your Government Gateway ID and password (please note this is not your Taxpayer reference). If you do not already have an account, you will be given the opportunity to sign up.
Please note it’s important to register ahead of time and ideally weeks or months before the deadline to avoid delays or penalties as some of the information you may require as part of the sign up process may arrive by post which can take 3-7 working days during peak times such as December and early January. The deadline for submitting your self assessment tax return online is the 31st of January every year.
Deadlines For Submitting Annual Self Assessment Tax Returns
By post
If you wish to submit your self assessment tax return via post, you will need to phone HMRC and ensure your paper forms are filled in and returned by midnight on the 31st of October each year.
If you are a trustee of a registered pension scheme or a non-resident company, you can also benefit from an extended deadline of midnight on the 31st of January each year.
Online
For online self assessment tax returns, there is a single deadline of midnight on the 31st of January every year.
Additional information
Please note no extensions to the deadlines can be granted and failure to submit a return will result in a fine.
If you are registered for self assessment tax returns, you must submit a return every year even if you did not exceed the £1,000 taxable income threshold during that year. This just lets HMRC know you are not due to pay tax during that year and will ensure you do not receive any fines for late submissions or missing submissions.
What Information Do You Need To Fill In A Self Assessment Tax Return?
Whether you are filing via post or online, the information you need will be the same and if you are completing your return online, you’ll be able to save your progress as you go through each section so it does not have to be completed in one go!
You will need to provide the following to complete your tax return:
- Your Unique Taxpayer Reference (UTR)
- Your National Insurance Number
- Your untaxed income figures from all your income streams (you do not need to submit your accounts but you will need the totals across the different categories, e.g. from rentals, sale of goods and services, interest, etc.)
- Your expenses for your self-employment activity (you will only need to provide an itemised list of expenses if your annual turnover is over £85,000)
- Any charitable contributions you have made which might make you eligible for tax relief
- If you are also currently employed and receive a wage where the tax has been deducted, you will also need to provide the amount you have earned and the tax you paid this year. This can be found on your latest P60 forms, though you do not need to submit your P60 directly.
- You will also need to provide/confirm your trading address (which may be your home) and your business type and activity.
What Type Of Expenses Can Be Deducted From Income For Self Assessment Tax Return?
There are some types of expenses which can be claimed back and deducted from your income figures and therefore minimise your taxable profits.
These include:
- Office, property and equipment costs, e.g. stationery, postage, rent
- Car, van and travel costs, e,g, fuel, accommodation, meals on business trips
- Clothing expenses, e.g. uniforms, protective clothing, costumes
- Staff expenses, e.g. salaries, bonuses, subcontractors
- Things you buy to sell on, e.g. stock, raw materials, costs of production
- Legal and financial costs, e.g. accountants, solicitors, professional indemnity insurance premiums,
- Costs of your business premises, e.g. insurance, utilities, security
- Advertising, marketing, entertainment, or subscriptions, e.g. free samples, website costs, organisation memberships
- Training courses related to your business, e.g. improving existing knowledge or keeping up-to-date with your industry
Please note, however, you cannot claim expenses if you are within your £1,000 tax-free trading allowance.
How To Tell HMRC You No Longer Need To Submit Self Assessment Tax Returns
If you have stopped working for yourself but you’re still registered for self assessment tax returns, you will need to inform HMRC. This can be done online at the following link: https://www.gov.uk/self-assessment-tax-returns/no-longer-need-to-send-a-tax-return.
Please note that HMRC will need to approve your application and you may still need to submit a tax return if you do not receive confirmation from HMRC before the 31st of January.
How To Pay Your Self Assessment Tax Bill
There are many different methods of payment accepted by HMRC including payment through the HMRC app, direct debit, online payment, over the phone, CHAPS, Bacs, posted cheque, in branch at your bank, and more. See all options and the link to pay online by going to https://www.gov.uk/pay-self-assessment-tax-bill.
Please note payment will be due by the 31st of January for the tax owed in the previous tax year (same deadline as the submission of your tax return). If you are splitting the payment over two instalments, the first payment on account will be due at midnight on the 31st of January and the second at midnight on the 31st of July.
Contact MMG Chartered Accountants
Take advantage of cloud accounting best practices and elevate your business to new heights of success with MMG Chartered Accountants by contacting our team at mail@mmgca.co.uk or calling your local branch.