For employees and pensioners, tax is typically deducted automatically at source from wages (if you are employed) and pensions (from your pension provider).
People and businesses with other income not deducted at source and above a certain level must file a self assessment tax return with HMRC.
If you were self-employed as a sole trader in the last tax year (6 April 2022 to 5 April 2023) and earned more than £1,000, you need to file a tax return. You must also file one if you were a partner in a business partnership or director of a limited company whose income was not taxed at source and/or have further tax to pay.
Even if your primary income is from your wages or pension, you may still need to send a return if you work in specific sectors, were paid more than £100,000 via a PAYE salary scheme, or have any other untaxed income, some examples of this are:
- Renting out a property
- Tips and commissions received
- Savings, investments and dividends
- Foreign income
Its not all bad news and a chore, many people file a self assessment tax return to claim some income tax relief or prove you are self-employed, for example, claiming work related expenses or claiming tax back if your employer has made a mistake with your tax calculations.
HMRC offers this decision tree if you are still not sure whether you need to file a return.
Its worth noting that if HMRC has sent you a notice to file a self assessment tax return, you must complete one, even if you think you don’t need to. This can be a notice on your government gateway account online, or can be a letter received in the post.
Tax return dates and deadlines
For the 2022/23 tax year, the deadline for registering for Self Assessment if you’re self-employed or a sole trader is 5 October 2023.
The deadline for filing paper tax returns is midnight on 31 October 2023. The online deadline is midnight on 31 January 2024.
Once you’ve completed your first tax return, in addition to whatever tax and National Insurance (NI) is due for the previous tax year, you may also have to make two payments towards your upcoming tax bill for the current tax year we’re in right now. Please see our blog titled ‘‘What are payments on account? – Self Employed”
This is known as payment on account, and you’ll have to do it every year moving forward.
The first deadline for paying the tax you owe on account is also midnight on 31 January following the tax year followed by a second payment on 31st July
Here’s an example.
If John Smith has a Self Assessment bill of £3,000 for 2022/23, he’ll have to pay £4,500 by 31 January 2024—£3,000 for 2022/23, and the first instalment of £1,500 in advance for the 2023/24 tax and National Insurance bill. Then, by 31 July 2024, he’ll have to pay the remaining £1,500.
How to register and file a tax return online
For tax year 2022/23, 96% of those required were filed online because, according to HMRC, it’s easy, secure, available 24 hours a day, and you can sign up for email alerts and online messages and reminders to help you manage your tax affairs.
If you’ve not completed a tax return online before, you must register for a government gateway account – this is HMRC’s online portal for you.
When you’ve signed up, HMRC will send you an activation code, which can take 10 working days to arrive on the post usually. You’ll also receive a user ID and Unique Taxpayer Reference (UTR). Keep this safe you will need it.
If you’ve filed a return before, but not last year, you will need to register again.
Before applying online for Self Assessment, gather all the information you need in advance.
You’ll need your UTR, National Insurance number and employer reference if you have one. You may need your end of year certificate from your employer (P60), P11D expenses or benefits, P45 details of leaving work or payslips.
You’ll need your bank or building society statements at hand, and if you work for yourself, you will need your profit or loss account or other business accounting books and records too.
The first section asks for personal details.
The next asks about where you have received income or gains from, for example, employment or self-employment, a company or partnership, properties, trusts, capital gains, or from overseas.
Answer “Yes” to any of the boxes in this section to show that you did receive income from any of these sources. This will cause further questions to appear asking about these sources of income.
The third section asks about income from bank or building society interest, pensions, share dividends and benefits. It’s important to mention these even if you’re completing Self Assessment because you’re a sole trader. HMRC needs to know about all your income, no matter where it comes from.
The form then asks for other information such as student loans, pension contributions, gifts, charitable donations, child benefit and marriage allowances.
Don’t send any receipts, accounts or other paperwork to HMRC supporting your Self Assessment return unless HMRC asks explicitly for them. Even then, you should only send copies and keep the originals safe.
You’re responsible for the information provided, so take your time filling in your information on your return. Enter the figures carefully and double-check everything before you click submit.
The advice is to fill in as much information as you can on your return. You can save the information you enter on each screen as you go along, allowing you to continue later.
Yes you can also go back and correct figures at any time before you hit the final submit button. Save a copy of your final return and print a copy of the submission receipt to prove it was filed.
Assuming you file on time, you must keep records of all information used to complete your Self Assessment tax returns—which is to say, your accounts and other information. Self-employed businesses should keep this for up to a minimum of five years after the 31 January deadline each year. We advise 7 years! You never know!
A significant penalty can apply for each failure to keep or preserve adequate records should HMRC come knocking at your door.
And that’s pretty much it! If of course you are not comfortable, please reach out to HMRC or an accountant and we can help.