Self assessment tax returns explained

Multiple individuals use self assessment tax returns to provide HMRC with the information needed to calculate any tax they owe. This is required for some people, and there are various deadlines and requirements that need to be met by anyone who needs to submit a return. Self assessments can be completed online or by post, and you have multiple options for paying for any tax if it’s calculated that you owe some.

What is a self assessment tax return?

A self assessment tax return is a system whereby individuals inform HMRC about income for the previous tax year that’s liable for taxation. The self assessment is a form used to provide all relevant information to HMRC, who will then calculate what tax you owe. After completing a self assessment, you may be required to pay tax depending on the outcome of information provided.

Who needs to complete a self assessment tax return?

Many individuals who are employed will automatically pay their tax through the PAYE system, but sole traders, partnerships and other types of individuals will be required to submit a self assessment tax return annually. HMRC may send you a letter requesting that you submit a tax return, but if they do not and you fall under one of the following categories, then you still need to complete a tax return:

1. You’re self-employed, such as a sole trader 
2. You’re a partner in a business partnership
3. You’re a company director receiving dividends
4. You earn additional income outside of your PAYE salary, such as tips or commissions
5. Either you or your partner earns over £50,000 a year, and you claim child benefits
6. You are a minister of any religion, faith or denomination
7. Your expense claims have exceeded £2,500 in the past year
8. You live in the UK and you’re earning income from overseas
9. You live overseas and you’re receiving income from a UK venture
10. Your PAYE income exceeds £100,000
    

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Please note: There may be additional circumstances where you are required to submit a self assessment tax return. To confirm whether you are required to complete a return, visit: https://www.gov.uk/check-if-you-need-tax-return 

How to register for self assessment tax returns

You can register for your self assessment tax return online, which can take up to 20 days to be processed and completed. The process may vary slightly depending on whether you’re self-employed, a member of a partnership or otherwise, but the general steps that will be taken are:

1. Create your account online and register for self assessment, which will allow you to file your first tax return. 
2. You’ll then be provided with a unique taxpayer reference (UTR) which is a unique 10 digit code that you’ll need for all future self assessment purposes.
3. HMRC will send a letter to you containing a code that you’ll need to confirm online. This helps to prove your identity and demonstrate that the address you’ve used is correct.
4. Once confirmed, you’ll be able to log into the online gateway and provide the information required for your self assessment tax return.

What information will you need to provide for your self assessment?

Once your account has been set up, you’ll be in a position where you can start your self-assessment by logging into the portal. You should prepare all of the information needed beforehand to make the process quicker and easier to complete, as you’ll be asked for the following details during the assessment:

• The unique UTR number that was allocated to you when you registered
• Your national insurance (NI) number
• Details of all untaxed income in the year you’re providing information for, such as your dividend payments, profits from assets, income from self-employment etc.
• Details of any expenses that relate to your self-employment or partnership business, such as rent, equipment and fuel
• Any contributions made to charitable organisations
• Pension contributions
• A P60 document (where applicable) or any other records that detail income that you’ve already paid tax on
• Student loan repayments
• Marriage allowances
• Benefits, such as job seekers, disability etc.
• Income generated from capital gains
• Information on any other sources that you have received income from

When is your self assessment tax return due?

Your self assessment is due every year for as long as you meet the eligibility criteria for submitting one. You’ll be required to provide information for the previous financial year, and a failure to submit your returns, or returning them late may result in penalties of £100 and greater. 

There are several deadlines depending on whether you're registering, submitting your returns by paper, using the online portal, or paying the tax you owe. For the tax year running between 6 April 2020 - 5 April 2021, the deadlines are as follows:

• ‍Registration - you must register by 5 October 2021‍
• Paper returns - They must be received by 31 October 2021‍
• Online returns - You must submit your returns by 31 January 2022‍
• Paying the tax you owe - All owed tax must be paid by 31 January 2022
  

There are instances where you can extend the period in which you submit or pay for your accounts, but these reasons vary and only apply in specific circumstances. For more information, visit the government page about self assessment deadlines.

Can you update your self assessment?

If you think you’ve made an error and you need to update your self assessment, you must update the provided information within 2 years by 31 January. For example:

1. If you need to update your 2019 - 2020 tax year assessment, you’ll have to do so by 31 January 2022.
2. If you need to update your 2020 - 2021 tax year assessment, this must be done by 31 January 2023.
   

You can make these updates by logging into your government gateway, but you’ll only be able to update the previous and current tax years. If you need to update a tax period that falls outside of this timeframe, you’ll need to contact HMRC.

How do you pay your self assessment tax bill?

After completing your self assessment, HMRC will let you know your final tax calculation, which details how much you owe. If you completed your tax return online, you’ll have the option to ‘View your calculation’ which may take up to 72 hours to appear. If you completed a paper return, then you’ll receive a bill by post.

Once you’ve received your bill, you must pay it by 31 January via one of the following methods:

1. Through your online bank account
2. Via telephone banking
3. CHAPS payment
4. At your bank or building society
5. Online with a debit or corporate credit card
6. BACS
7. Direct debit
8. By cheque through the post
   

Some payment methods may take longer than others to process, which is essential to consider given the payment deadline. You can learn by visiting the government’s pay self assessment tax bill page.

Manage your HMRC correspondence at a virtual address

If you regularly move, live at several addresses, or manage correspondence at several addresses, it can be difficult to keep up-to-date with any mail HMRC sends you. Given the deadlines of submitting information such as your self assessment tax returns, missing any mail sent to you by HMRC can be costly and cause you problems in the future.

Opting to use a virtual address for all of your correspondence relating to your business, HMRC or important mail can help you to manage everything in one place. Regardless of whether you move home, leave the UK or have several properties, your virtual address will remain the same, allowing you to keep up-to-date with mail no matter how your personal situation changes. We provide a virtual address service that allows you to read any of the mail you receive online. To learn more, visit our virtual address page.