Personal Tax

What is a self-assessment tax return?

Income tax is collected by HMRC through their self-assessment system. It is typically deducted automatically from salaries and pensions, but individuals and businesses with additional income must declare it on a self-assessment tax return. This is a form submitted to HMRC detailing income, expenses, and the overall financial position of an individual or business.

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How do I know if I need to complete a self-assessment tax return?

You are required to file a self assessment tax return if you meet any of the following criteria in the last tax year:

• ​You were self-employed as a ‘sole trader’ and earned over £1,000.
• You were a partner in a business partnership.
• Your total taxable income exceeded £100,000.
• You were liable to pay the High Income Child Benefit Charge.

Additionally, a tax return may be necessary if you have untaxed income, such as COVID-19 grants, rental income, tips, commission, or income from savings, investments, and dividends.

Check if you need to file a self assessment tax return

What happens if you don’t file a self-assessment tax return?

You will incur penalties for failing to meet the deadline for submitting a self-assessment tax return or paying your tax liability.

If your tax return is up to 3 months late, you will face a £100 late filing penalty, with increasing penalties for later submissions or delayed tax bill payments. Additionally, late payments are subject to interest charges.