Do I have to file a Self Assessment tax return with HMRC?

When you receive income from self-employment or other sources such as property or investments, HMRC requires you to complete a Self Assessment tax return to ensure you are paying the correct tax.

Self assessment is the system HMRC uses to collect income tax from people who are self-employed, freelance or have multiple sources of income. Sounds straightforward right?

Well, not quite... these are not the only reasons why you may be required to submit a tax return and the UK tax system in known for being overly complicated. Knowing if, when and how you need to submit a Self Assessment can be confusing - especially if you've never done it before or if you have complex requirements.

What is Self Assessment?

When you become self-employed or receive income from other sources that are not taxed at the time of payment, Self Assessment is the system HMRC uses to collect income tax. Self Assessment tax returns are submitted annually by 31 January if you are filing online.

In the article we'll discuss three of the most common reasons you need to file a Self Assessment with HM Revenue & Customs:

1. You have untaxed income
2. You believe you are entitled to a refund or tax relief
3. HMRC has sent you a notice to submit one

1. Self Assessment tax return for untaxed income

Untaxed income refers to any money you make that has not been taxed before you receive it and the total taxable income is above the Personal Allowance threshold - this is the basic amount of income you can earn tax-free. You must tell HMRC about income you have not paid tax on.

Common areas where income is not taxed at the source: 

• Income earned through self-employment as a sole trader
• Dividend income 
• Money earned from renting out a property as a landlord
• Income from savings and investments 
• Foreign income you earn while living in the UK
• Income from the UK when you live abroad
• Where your income was greater than £100,000
• Any money you receive in addition to your pay that has not been taxed through PAYE
• Capital gains from the sale of a property, shares or other applicable assets in which you are liable for Capital Gains Tax.

2. Claiming a refund or tax relief through Self Assessment

HMRC giving out money - is this even possible? Well, it doesn't happen too often - but if you've overpaid in tax you could be entitled to a refund!

While HMRC will occasionally inform you of a tax refund (for instance when you've overpaid through PAYE), it's more likely that you will need to submit a request manually through Self Assessment in order to benefit from a refund or tax relief.

Reasons why you may overpay income tax:

• The incorrect tax code was issued to your employer - this can be a common issue where an emergency tax code was provided
• Unused allowances and reliefs such as "Marriage Allowance"
• Where there has not been a tax refund claim for certain items or work expenses
• Not claiming all eligible tax relief when self-employed
• When an individual has multiple sources of income that are taxed at the source (e.g. pensions)
• If part of the Construction Industry Scheme, a contractor deducts more than what is required
• Payroll miscalculations
• When there is a change in employment and a P45 has not been provided to detail previous employment

3. Notice to submit a Self Assessment

HMRC may contact you about completing a Self Assessment - if you receive a notice to submit a tax return you must do this before the deadline.

If you think you have been sent a notice in error you can contact HMRC, or request your accountant do this on your behalf, and request that they withdraw the notice to submit a Self Assessment - but you will likely still need to submit a tax return.

Working with an accountant to file your Self Assessment tax return

Tax season is stressful and when you're in a rush to meet a deadline mistakes can happen - unfortunately when it comes to Self Assessments those mistakes will cost you!

Whether you're not sure where to start, don't feel confident in managing your own tax return or know that you don't have the resources to submit on time - working with an accountant is often the best route to take as it can save you both time and money.

Information we will need to complete your Self Assessment tax return:

• 10-digit Unique Taxpayer Reference (UTR) - if this is your first time submitting a tax return, this will be issued once you have registered for Self Assessment with HMRC
• Your P60/P45 for any employment income in addition to the P11D for any taxable employment benefits (Benefits in Kind) and your final payslip for the relevant tax year
• Information related to any other income for the relevant tax year including;
  • Details of income and expenditure from rental properties
  • Income from trusts
  • Documentation of income and expenditure from self-employment or partnerships (including any CIS deductions if relevant)
  • Bank or other interest received
  • Dividends received on shareholdings and any other income from investments
  • Income from any pensions (including state pension if applicable)
• Contributions made to personal pension schemes
• Details of charitable giving on which you may be entitled to tax relief
• Documentation of any SEIS/EIS/VCT investments made in the period
• Details of Child Benefit received
• Information related to any capital disposals (shares, property etc.)
• If relevant, information regarding any outstanding student loan

This is my first time having to submit a tax return

If you're required to submit a tax return for the first time you will need to make sure you register for Self Assessment with HMRC by 5 October following the end of the tax year in which you earned untaxed income.

If you're working with our tax team they can register with HMRC for you, alternatively you can do this online through the government website - failing to register on time may result in a penalty.

Important dates the 2024/2025 tax year

Important reminder: The first phase of Making Tax Digital for Income Tax Self Assessment Tax Returns (MTD for ITSA) will apply from April 2026 for self-employed individuals and landlords with income more than £50,000.

Submitting and paying your taxes on time is very important, if you miss the deadline you will receive a penalty. The amount you will owe depends on how late your return is submitted and if you paid your tax bill late - late payments are also subject to interest charges.

How can DSA Prospect help?

Our personal tax services are designed to help you manage your finances and tax affairs in the most efficient ways. Get in touch with our team of tax advisors who will provide you with bespoke advice tailored to your personal tax needs with a focus on enhancing personal wealth and reducing your liabilities.

This blog was updated on: 05/04/2024

This blog was originally published on: 01/12/2022

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