Self-Assessment Tax Returns: Who Has to File

Self-employed workers or those with additional income streams must pay income tax by filing a self-assessment tax return.

Rebecca Goodman Published on 16 December 2020. Last updated on 21 January 2021.
Self-Assessment Tax Returns: Who Has to File

Tax is usually automatically taken from your wages, but if you’re self employed or earn money in another way — such as a second job or by renting out a property — you will have to pay your tax through the self-assessment system.

When a tax return is completed, the money must be paid to HM Revenue and Customs (HMRC). This is different to the pay-as-you-earn, or PAYE, system where taxes are automatically deducted by an employer before the money is paid.

Here we explain everything you need to know about the self-assessment system.

How does self assessment work?

If you’re self employed, you’ll usually be paid throughout the year but the tax and National Insurance will not automatically be taken off.

At the end of the year, you will then be required to file a tax return, which lists everything you’ve earned over the year and how much tax and National Insurance you must now pay. You must then make the payment, which can be done via direct debit or as a bank transfer, to HMRC before the deadline.

In some cases, even if you aren’t self-employed you may have to make a self-assessment return, such as if you earn money through another income stream.

»MORE: Self-employed vs. sole trader: What’s the difference?

Who has to complete a self-assessment return?

You will need to send a tax return for any of the following reasons if for the last tax year you were:

  • Self-employed as a sole trader and earned more than £1,000
  • A partner in a business partnership
  • Earning an income from renting out a property
  • Being paid an income from savings, investments and dividends

In some cases you may need to file a return to claim if you are eligible for certain tax relief, such as on charity donations, pension contributions, or maintenance payments.

How to register for self-assessment

You can register for self-assessment online or by downloading the SA100 form and posting it to HMRC. If you did not send an online return last year, you will need to register again to do so.

HMRC will need to know if you are self-employed as a sole trader, not self-employed, or registering a partner or partnership. This ensures your tax return asks the right questions.

Within 10 days of registering you should be sent a Unique Taxpayer Reference which you will need to complete your self assessment.

How to file your self-assessment return

You can file your return online or by post, and the deadlines are different for each.

If you have any questions about your return, or you need help filling it in, you can call HMRC on the self-assessment helpline (0300 200 3310), use its web chat facility, or even send it a tweet.

If you aren’t confident filing your tax return yourself, or you don’t have the time, you can pay an accountant to do it for you. They will calculate how much tax and National Insurance you need to pay, and will file the return for you.

How and when to pay your tax with self assessment

The deadline for paying tax through the self-assessment process was 5 October 2020. Paper tax returns were due to HMRC by 31 October 2020.

If you’re filing an online return, the deadline is midnight on 31 January 2021. All payments must also be completed by 31 January 2021.

If you miss the deadline for filing, there is usually a fine to pay of around £100, although you can appeal this in some circumstances.

In some cases you may need to make a payment by the end of July. This is the case unless your last self-assessment bill was less than £1,000, or you have already paid 80% of the tax you owe.

However, this year because of the coronavirus outbreak, it has been possible to defer this payment until 31 January 2021 without penalty.

How do I unregister from self-assessment?

If you have stopped trading as a sole trader and you’re no longer self employed you need to notify HMRC and send a final tax return.

About the author:

Rebecca Goodman is a freelance journalist who has spent the past 10 years working across personal finance publications. Regularly writing for The Guardian, The Sun, The Telegraph, and The Independent. Read more

If you have any feedback on this article please contact us at [email protected]