07718128235
omar@aswatax.co.uk
07718128235
omar@aswatax.co.uk
April 5, 2024

Gov UK Tax Return Self Assessment: A Guide for UK Taxpayers

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Filing a Self-Assessment tax return can feel daunting if you're new to the process. 

Unlike traditional PAYE (Pay As You Earn), where income tax is automatically deducted from your salary by your employer, Self-Assessment puts the onus on you to report your income and expenses accurately and pay any taxes owed directly to HMRC (Her Majesty's Revenue and Customs).

Don’t know how to do this?

Don’t worry. This blog post will equip you with the knowledge and confidence you need to be able to do it yourself or at least be able to tell what your accountant is doing.

What are Self-Assessment Tax Returns?

Before we dive deep, let's clarify what self-assessment tax returns are. 

Essentially, it's a system used by HMRC (Her Majesty's Revenue and Customs) to collect income tax. 

Taxes are usually deducted automatically from wages, pensions, and savings. However, for individuals with other sources of income or complex tax situations, filling in a self-assessment tax return is a must to report and pay the tax you owe.

Here are some categories of people that this applies to:

  • Self-employed individuals: Sole traders, freelancers, and consultants all fall under this category.
  • Landlords: If you rent out a property, you'll need to file a Self-Assessment tax return to declare the rental income you receive.
  • People with multiple income sources: This includes individuals with income from overseas sources, investments, or savings exceeding a certain threshold.
  • Those receiving benefits: In some instances, receiving certain benefits may trigger the need to file a Self-Assessment tax return.

Who Needs to File a Self-Assessment Tax Return?

Not everyone under the categories we mentioned above earlier needs to file a Self-Assessment tax return. Here are some common scenarios that necessitate Self-Assessment:

  • Your annual income exceeds £100,000: If your total income from all sources surpasses £100,000 in a tax year (April 6th to April 5th of the following year), you'll need to file a Self-Assessment tax return.
  • You have untaxed income: This includes income from renting out a property, overseas income, or savings interest exceeding a specific amount.
  • You've received a P800 form from HMRC: This form indicates that you owe additional tax or are due a tax refund. It often serves as a prompt to register for Self-Assessment.

If you're unsure whether you need to file a Self-Assessment tax return, HMRC offers a handy online tool to help you determine your filing obligation.

How to Register for Self-Assessment

Once you've established that you need to file a Self-Assessment tax return, the next step is to register with HMRC. 

Here's a breakdown of the registration process:

  1. Head over to the HMRC website: You can register online through the HMRC website.
  2. Create a Government Gateway account if you don’t already have one.
  3. Gather your information: Have your National Insurance number, Unique Taxpayer Reference (UTR) (if you have one), and contact details readily available.
  4. Complete the online form: The registration process is straightforward and shouldn't take longer than a few minutes.
  5. Activate your online Self-Assessment account: Once registered, you'll receive an activation code via mail to access your online Self-Assessment account.

What Documents Do I Need to File a Self-Assessment Tax Return?

Equipping yourself with the necessary documents is crucial for completing your Self-Assessment tax return accurately and efficiently. 

Tax return self assessment Documents
Tax return self assessment Documents

Here's a rundown of the essential documents you'll likely need:

  • P60s: This form details your income and tax paid if you've been employed by a company during the tax year. You'll receive a P60 from each employer you've worked for.
  • P45s: If you've changed jobs during the tax year, you'll receive a P45 form from your previous employer. This form outlines your earnings and taxes paid up to your last day of employment.
  • Income records: For self-employed individuals, landlords, or those with income from other sources, keeping detailed records of your income throughout the year is essential. This might include invoices, bank statements reflecting income inflows, or any other documents that substantiate your income.
  • Expense receipts: Fortunately, you can offset your tax bill by claiming allowable business expenses. Hold onto receipts for expenses incurred while running your business or generating income. Examples of claimable expenses include travel costs, office supplies, equipment purchases, and professional fees.
  • Government benefit letters: If you receive certain benefits, you may need to declare them on your Self-Assessment tax return. Keep copies of any relevant benefit letters you receive from the government.

Keeping Organized Records:

It is important that I mention this, maintaining a well-organized system for your income and expense records throughout the year will make completing your Self-Assessment tax return a breeze. 

Consider using accounting software or cloud-based record-keeping solutions to streamline the process. HMRC's online portal also offers a storage facility for receipts and other documents related to your Self-Assessment tax return.

Don't fret if you've misplaced some receipts. HMRC generally accepts bank statements or other forms of evidence to support your claimed expenses. 

However, it's always best to keep proper records for future reference and potential audits.

Completing a Self-Assessment Tax Return

Now that you're registered and have your documents in order, it's time to delve into the process of completing your Self-Assessment tax return. 

HMRC offers two main options for filing your Self-Assessment tax return:

  • Online filing: This is the preferred method by HMRC and is generally considered more efficient and user-friendly. You can access the online filing system through your Government Gateway account. The online tax return form platform allows you to complete your return section-by-section, save your progress, and submit it electronically.
  • Paper filing: While less common, paper forms are still available for those who prefer a non-digital approach. You can request a paper form (SA100) by calling HMRC's Self-Assessment helpline. However, keep in mind that paper returns take longer to process and may not offer the same level of flexibility as the online system.

Calculating Your Tax Bill

Understanding how your tax bill is calculated is a crucial aspect of completing your Self-Assessment tax return accurately. 

Here's a breakdown of the key factors that determine your tax liability:

  1. Income: Your total income from all sources throughout the tax year forms the basis for your tax calculation. This includes employment income, self-employment income, rental income, savings interest, and any other taxable income you've received.
  2. Tax Allowances and Reliefs: Fortunately, the government offers various tax allowances and reliefs that can significantly reduce your tax bill. Here are some common examples:
    1. Personal Allowance: This is a tax-free amount you can earn yearly before income tax applies.
    2. Marriage Allowance: Married couples and civil partners can transfer a portion of their personal allowance to their spouse or partner if they earn less, potentially reducing their overall tax burden.
    3. Blind Person's Allowance: If you're registered blind, you may be entitled to an additional tax allowance.
    4. Working from Home Allowance: For those who work from home, you can claim tax relief on a portion of your household bills to account for increased expenses related to your home office.

It's important to research and identify all the tax allowances and reliefs you might be eligible for. HMRC provides a detailed list of allowances and reliefs on their website 

  1. Tax Rates: After deducting your allowances and reliefs from your total income, the remaining amount is subject to income tax. The UK income tax system operates on a progressive basis, meaning tax rates increase as your income rises. 

Here's a simplified breakdown of the current UK income tax rates for the 2023/24 tax year:

Income ThresholdTax Rate
Below £12,5700% (Personal Allowance)
£12,571 - £50,27020%
£50,271 - £150,00040%
Above £150,00045%

Additional Taxes:

Depending on your income and circumstances, you might also be liable to pay other taxes on top of income tax, such as:

  • National Insurance: This is a social security contribution that funds the National Health Service and other state benefits. The amount you pay is typically deducted from your salary slips if you're employed or calculated as part of your Self-Assessment tax return.
  • Capital Gains Tax: If you sell assets like property or investments for a profit exceeding a specific threshold, you may need to pay Capital Gains Tax.

HMRC's online tax calculator is a valuable tool that can help you estimate your tax bill for the year. 

This can be particularly helpful for getting a general idea of your tax liability before you complete your Self-Assessment tax return.

Tax Bill Calculating
Tax Bill Calculating

How to Pay Your Tax Bill

Once you've submitted your return, paying your tax bill is the next step. 

HMRC offers various payment options, including bank transfer, debit card, or setting up a payment plan if you’re unable to pay in one go. 

Here's an overview of the available payment methods and important deadlines to remember.

Payment Options:

HMRC offers several convenient methods for paying your Self-Assessment tax bill:

  • Online payments: This is the quickest and most efficient way to settle your tax bill. You can make online payments through your Government Gateway account linked to your Self-Assessment online filing system.
  • Direct debit: Setting up a direct debit allows HMRC to automatically collect your tax payment on the due date from your nominated bank account. This ensures timely payments and avoids the risk of late penalties.
  • Telephone payments: You can make payments over the phone using your debit card by calling HMRC's Self-Assessment payment line.
  • Cheque: While not the preferred method, payments can be made via cheque payable to "HMRC". Ensure you write your Unique Taxpayer Reference (UTR) on the back of the cheque. However, keep in mind that cheques take longer to process, so factor in extra time for clearance to avoid late payment penalties.

Important Deadlines

Missing tax payment deadlines can incur penalties and interest charges. 

Here are the key deadlines to remember for Self-Assessment tax returns:

  • Filing deadline: The deadline for filing your Self-Assessment tax return and calculating your tax bill is typically October 31st following the end of the tax year (April 5th).
  • First payment deadline: Even if you owe more tax throughout the year, an initial payment on account is usually due by January 31st following the end of the tax year. This payment represents 50% of your estimated tax liability for the previous tax year.
  • Second payment deadline: The balancing payment for any remaining tax owed for the previous tax year is typically due by July 31st following the end of the tax year.

Deadlines and Penalties for Late Submission

Failing to settle your tax bill by the deadlines will result in penalties. The penalty structure increases the longer the payment remains outstanding. HMRC offers a detailed explanation of late payment penalties.

Payment Plans:

If you're unable to settle your tax bill in full by the deadline due to unforeseen circumstances, you can contact HMRC to discuss setting up a time-to-pay arrangement. 

This allows you to spread your tax debt over a manageable period to avoid significant penalties. However, interest will still accrue on the outstanding balance.

Tax payment Strategy
Tax payment Strategy

Tips for Managing Your Self-Assessment Tax Returns

Managing your self-assessment doesn’t have to be a headache. Here are some tips:

  • Keep meticulous records of your income and expenses.
  • Start your tax return early to avoid the rush (and stress) as deadlines approach.
  • Consider seeking professional advice if your situation is complex.

Conclusion

With the right knowledge and preparation, tackling self-assessment tax returns can be smooth sailing.

We've covered the essentials, from registration to submission, ensuring you're well-equipped to manage your tax responsibilities.

A few things to keep in mind as you go are…

  • You need to fill out and complete a tax return to pay your taxes. 
  • Do it online for convenience. 
  • Register for self-assessment to determine how much tax you owe.
  • And timely and accurate tax return submission not only keeps you compliant but also minimizes stress and potential penalties.

At ASWATAX, we have expert tax professionals who can provide expertise and a bespoke tax service for your unique circumstance, as well as represent you in dealings with HMRC so you don’t have to do it all by yourself. 

If you need the guidance of a professional tax practitioner, feel free to reach out to us and we’ll be happy to help you out.

To your success!

Meet Omar

Omar is a Chartered Tax Advisor (a.k.a an expert on tax issues) and founder of ASWATAX. He regularly shares his knowledge and best advice here in his blog and on other channels such as LinkedIn.
Book a call today to learn more about what Omar and ASWATAX can do for you.

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