What do I need to do for my self-assessment tax return?

In the UK, over 11 million people file self-assessment tax returns each year. By filing a self-assessment tax return, or personal tax return as they are also referred to, you are reporting the correct amount of personal taxes you need to pay HMRC for the previous financial year (the financial tax year runs from 6th April to the following 5 April). You may be required to file for various reasons, but all the steps on how to do this will be covered below. The easiest way to file is through the government’s online portal. HMRC are continuing to phase in their Making Tax Digital initiative which means that people will eventually no longer be able to complete a paper tax return and must complete and manage all taxes online.

Do I need to complete a self-assessment tax return?

You need to complete a self-assessment tax return if you have any forms of untaxed income. Most people who are employed are taxed at source through a PAYE scheme set up by their employers. It means the salary they receive has already had tax deducted and they do not need to complete a tax return. However, this does not mean that it is only self-employed people who need to complete their personal tax returns, as anyone with other sources of income may have to declare and report this to HMRC through a tax return.

You are likely to need to complete a self-assessment tax return if:

• You are self-employed and earn over £1,000 per year after deducting any expenses
• You are a partner in a business partnership
• You are a limited company owner/director and have income not taxed under PAYE (dividends)
• You are a minister of religion of any faith or denomination
• You receive income from a trust or settlement
• You have income from savings or investments of £10,000 or more before tax
• You receive rental income
• You or your partner receive child benefits and your income is over £60,000
• You have incurred capital gains tax (CGT) when selling or gifting an asset

There may be other reasons why HMRC would like you to complete a tax return and they will send you a letter requesting you to do so if this is the case. However, if you believe that they are wrong, you should get in touch with HMRC to explain why you do not need to complete one.

If you have never previously completed a personal tax return but there have been changes to your income which you are not sure whether or not needs to be reported on a tax return you can use the HMRC online tool.

Who cannot file a self-assessment tax return online?

For certain purposes or circumstances, you will not be able to complete a tax return online. It must be filed either using commercial software (which you can use an accountant for if you do not have this yourself), or you can download the forms and send them into HMRC. This will apply if you are one of the following:

• a partnership
• receiving income from a trust or estate
• living abroad as a non-resident
• need to report ‘chargeable gains’, for example from life insurance
• are a Lloyd’s underwriter or a religious minister

How to file a tax self-assessment tax return

There are two possible ways to file a personal tax return – either by completing a paper form and posting it back to HMRC or filing your tax return electronically online. From 2020, HMRC are moving people away from paper format as much as possible and will only allow people to do so under certain conditions and where they have identified that it is not possible for them to do so online. If HMRC do identify you as being unable to complete online, they will send you out a paper form to complete and return by 31 October.

To learn how to complete your tax return online, you can find instructions on how to fill in the different sections from our article ‘How to fill in a self-assessment tax return form online’.

How to pay for a personal tax return

Once you have filed your self-assessment tax return online, you will be presented with a page on your online portal that tells you how much tax you need to pay HMRC. You can pay for your tax in numerous ways but be aware of how long it will take for payment to be received and whether deadline days fall on a weekend or bank holiday.

Same day or next day:

• online or telephone banking (Faster Payments)
• CHAPS
• Pay by debit or corporate credit card online
• At your bank or building society (you need a paying-in slip supplied by HMRC in order to be able to use this option)

3 working days:

• BACs
• Direct debit (if you have already set one up with HMRC)
• By sending in a cheque

5 working days:

• Setting up a new direct debit for the first time

When paying for your personal tax bill for the first time, you may need to be aware of payments on account. There is also the option to pay your tax bill regularly throughout the year with HMRC’s budget payment plan.

Deadlines for the self-assessment tax return

The UK financial tax year runs from 6 April to the following 5 April. This is the period you will need to account for when completing your tax return. Filing and paying for your tax return is due by midnight 31 January the following year. For example, if you are completing a tax return for the tax year 6 April 2022 to 5 April 2023, both the tax return and payment must be completed by 31 January 2024.

In addition to this main deadline, there are other key deadlines which may be worth noting. If you cannot submit your tax return online, then all paper submissions must be received by HMRC by 31 October following the end of the tax year. Using the same example: if you are completing a paper tax return for the period 6 April 2022 to 5 April 2023, then your paper tax return is due 31 October 2023.

Similarly, before submitting any self-assessment tax return for the first time, you must register to do so by 5 October the following financial year. As an example, if you started receiving rental income for the first time in September 2022, you would need to register for your self-assessment tax return by  5 October 2023 and complete and pay for your tax return by 31 January 2024.

What happens if you miss a self-assessment tax deadline?

If you miss a self-assessment deadline, you can attract two different penalties. The first is if you are late filing your personal tax return and the second is if you are late paying for your personal tax return.

If you are late filing:

• You receive an automatic £100 fine if you are late by 1 day
• You receive a further £10 fine per day you are late up to a maximum of £900 (90 days) if you are over 3 months late
• You receive an additional £300 fine or 5% of the tax owed (whichever is greater) if you are over 6 months late
• You receive another £300 fine or 5% of the tax owed (whichever is greater) if you are over 12 months late

If you are late paying for your personal tax:

• You receive a 5% charge on the tax you owe if you are 30 days late
• You receive another 5% charge on the tax you owe if you are 6 months late
• You receive a final additional 5% charge on the tax you owe if you are 12 months late

In addition to the fines, you will also be charged 3% interest on the tax owed if it has not been paid by the deadline, including amounts accumulated in charges. This means that the costs can quickly add up resulting in significant fines.

How to appeal a self-assessment penalty

In exceptional circumstances, it is possible to appeal against the penalties if you have what HMRC deem as a ‘reasonable excuse’ for filing a late return or payment. According to HMRC, a reasonable excuse is something that stopped you meeting a tax obligation that you took reasonable care to meet.

Some common examples of ‘reasonable excuses’ include:

• Your partner or another close relative died shortly before the tax return or payment deadline
• You had an unexpected stay in hospital that prevented you from dealing with your tax affairs
• You had a serious or life-threatening illness
• Your computer or software failed just before or while you were preparing your online return
• Service issues with HMRC online services
• A fire, flood or theft prevented you from completing your tax return
• Postal delays you could not have predicted
• Delays related to a disability you have

Any penalties incurred will be sent to you by post. They also contain an appeal form which you can use and return in order to request the penalty be waived.

Records to retain from your self-assessment tax return

When you file a personal tax return you are not required to provide the documents which act as supporting evidence for the figures you enter. Nevertheless, you should still keep these in good order should HMRC have any queries after your submission. HMRC are also known to carry out random spot checks as well as retrospective investigations, so, by keeping your records, you can protect yourself against any allegations HMRC issues. HMRC guidance suggests that records should be kept for a minimum of 22 months after the end of the tax year that the return is for. This means that you should keep all records for the tax year ended 5th April 2022 until at least January 2024.

The types of records you should keep include:

• Self-employed business income and outgoings
• Dividend income
• Investment income
• Interest payments
• Charity and pension contributions
• P60 detailing any PAYE income
• Foreign income
• Any income which is open to capital gains tax
• State benefits

This is not an exhaustive list, and if you believe you have other useful documents then it may be prudent to save these.

Whilst it is not mandatory to use an accountant to help you file your tax return, you may find it more efficient to do so as it will save you time, give you peace of mind, and help ensure you are claiming every possible allowance and claimable deduction to reduce your tax bill. For assistance, you can use our self-assessment tax return service.