How to file a Self Assessment tax return as a beginner
Filing your Self Assessment tax return for the first time can feel daunting, particularly for those venturing into self-employment or new income sources. However, grasping the ins and outs of this process is essential and can help you save valuable time, reduce financial strain, and alleviate stress. To help you navigate this journey more effectively, here’s a comprehensive guide designed for beginners that breaks down the Self Assessment process into manageable steps.
What is Self Assessment?
Self Assessment is your responsibility as a taxpayer to report your income and pay taxes directly to HMRC. While employed individuals typically have their income tax deducted automatically by their employers, self-employed individuals and others with different income sources must submit a Self Assessment tax return annually.
Who needs to file?
You need to fill out a self-assessment tax return if:
- You are self-employed (unless your income, before expenses, is under the annual £1,000 trading allowance).
- You are a partner in a business.
- Your property income goes over certain limits.
- You want to claim tax relief for employment expenses that are over £2,500 in a year.
- You owe capital gains tax that hasn’t already been paid this year.
- You are a minister of religion, regardless of your faith or denomination.
- You receive income from a trust or an estate of a deceased person and additional tax is due.
- You have foreign income (unless it’s only dividend income and together with any UK dividend income it’s less than the annual dividend allowance).
- You need to claim relief under a double tax agreement or for the remittance basis (if it doesn’t apply automatically).
- You are a non-UK resident and have taxable income in the UK.
- You have £10,000 or more in UK savings and investments (excluding those in an ISA).
- You receive £10,000 or more in UK dividends (excluding those in an ISA).
- You have any other untaxed income of £2,500 or more.
- Your total taxable income is £150,000 or more before tax (up to the 2022/23 tax year, this threshold was £100,000).
- You need to pay the high-income child benefit charge.
If you’ve received Self Assessment forms or an invitation to file a tax return from HMRC, it’s vital to complete and submit them on time, whether online or by post.
If you haven’t received an invitation but think you may need to submit a tax return, the Government has a handy tool which you can use to check: https://www.gov.uk/check-if-you-need-tax-return
Important deadlines to remember
Self Assessment deadlines are based on tax instead of calendar years and are submitted in arrears. For the 5th April 2024 tax year, the critical deadlines are as follows:
- Registering for Self Assessment for the first time: By 5 October 2024
- Paper tax returns: Due by midnight on 31 October 2024
- Online tax returns: Due by midnight on 31 January 2025
- Pay your tax bill: Also due by midnight on 31 January 2025
If you make advance payments towards your tax bill, note there’s a second payment deadline on 31 July. To stay organised, log in to your tax account using your Government Gateway ID to track your deadlines and outstanding amounts.
*If you have missed the registration deadline, register as soon as possible and submit your tax return and make any outstanding payment by 31 January 2025 – you can usually avoid the late to register penalty.
What happens if you’re late?
It is essential to adhere to the Self Assessment deadline, which is midnight on January 31st. If this deadline is missed, an immediate penalty of £100 will be imposed. Following this initial fine, you will have a three-month period to submit your Self Assessment, during which interest charges on any outstanding tax will apply.
Addressing your Self Assessment promptly is advisable to avoid incurring further fines. In addition, if a whole year passes without HMRC receiving your Self Assessment, the penalties escalate significantly, potentially resulting in a minimum of around £1,600 in fines, alongside accruing interest on any tax owed.
Furthermore, HMRC has the authority to impose severe penalties on individuals found to be deliberately withholding information or misrepresenting their tax obligations. This can include fines of up to 100% of the tax liabilities and the penalties above. It is crucial to comply with tax regulations to avoid these severe consequences.
How to submit your tax return?
Online applications
Are you thinking of going digital? Start by registering on gov.uk. This could take up to 20 days, so act swiftly and do not leave it until the last minute. Once you are registered, HMRC will send you a Unique Taxpayer Reference (UTR) and instructions on how to establish your Government Gateway account. Complete this process to gain access to the free HMRC Self Assessment online service for an easy submission experience.
Postal applications
Prefer the traditional route? Download the required form from the gov.uk website. You can also find a helpful guide detailing completing the paper tax return. After filling out your form, mail it to the following address before the 31 October deadline:
HM Revenue & Customs
Self Assessment
BX9 1AS
United Kingdom
Get prepared: What do you need at hand?
To make the filing process efficient, gather the necessary documents beforehand. Here’s what you’ll need:
- Your 10-digit Unique Taxpayer Reference (UTR)
- National Insurance number
- A P60 from your employer if you have one
- A P45 if you left a job during the tax year
- A P11D or P9D detailing any benefits and expenses
- A summary of rental income and expenses incurred
- Statements from savings and investments showing earned interest and dividends
- Comprehensive documentation of self-employment income, including receipts, bank statements, and accounts.
Read more: Self Assessment Tax Return Checklist 2024
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Getting started with your Self Assessment tax return
1. Register with HMRC
Before filing your return, ensure you have registered with HMRC as self-employed if appropriate. This will provide you with a Unique Taxpayer Reference (UTR) number you need for your self-assessment.
2. Gather necessary documents:
Collect all relevant documents, including income statements, invoices, business expense receipts, bank statements, and other financial data supporting your declared income and deductions.
3. Choose your filing method
You can complete your Self Assessment online through HMRC’s website or file a paper return. The online method is typically more efficient and comes with a built-in calculator to assist you.
4. Complete the tax return
Carefully complete your Self Assessment return detailing your total income, expenses, and other necessary information. Make sure to double-check your entries for accuracy to avoid any potential discrepancies.
5. Submit your return
Once you’re satisfied with your return, submit it before the deadline. Deadlines for submission can vary depending on your filing method—check HMRC’s website for detailed dates.
6. Pay any tax owed
After submitting your return, you will receive a tax calculation that tells you how much you owe. Ensure that you make your payment before the deadline to avoid penalties.
Read more: Top 6 Self Assessment mistakes to avoid
Do I need to register for Self Assessment every year?
No, you do not need to register for Self Assessment every year. Once you’re registered, HMRC will send you reminders to submit your Self Assessment each year unless you notify them that you no longer need to file.
This might occur if, for instance, you return to full-time employment or move abroad. It’s important to note that if you inform HMRC that you no longer require a Self Assessment but later find yourself in a situation where you need to file taxes again, you can pay tax using the same Unique Taxpayer Reference (UTR).
Conclusion
While filing your self-assessment tax return may seem challenging initially, approaching the process with the proper knowledge and preparation can significantly simplify your experience. By understanding the requirements and taking each step methodically, you can ensure your self-assessment is filed accurately and on time, allowing you to focus on what truly matters—growing your business and enjoying your entrepreneurial journey.
If you are still uncertain, it is advisable to obtain professional input from an accountant who can ensure all information is entered correctly and you take up any available tax reduction opportunities.
