Self assessment tax returns are used to tax any income that comes from self-employment, capital gains, or other avenues that aren’t taxed automatically. If you have earned any income that hasn’t been taxed then you may need to file one. You can complete self assessment tax returns online via the HMRC and Government Gateway. It is also possible to file on paper.
You will also be asked to pay any National Insurance contributions when you submit your completed tax return. National Insurance contributions will affect your entitlement to a state pension and other benefits so it’s important to make the payments when you submit your tax return.
Most people won’t need to complete self assessment tax returns. If you earn all your income as an employee then you will be taxed through the PAYE system without having to complete a tax return. However, if you run your own business or you have made money in other ways, then you might be required to file self assessment tax returns.
You should complete self assessment tax returns for any tax year in which you:
- earn more than £1000 from self employment
- earn more than £2500 by renting out property
- earn more than £2500 in untaxed income such as commission or tips
- make more than £10,000 (before tax) from investments or savings
- are claiming Child Benefit and have an income over £50000
- have a taxable income over £100,000 (even if you already paid tax through PAYE)
- sell property, shares or other assets that have increased in value since you acquired them (this is Capital Gains tax)
- are the director of a company or a trustee of a trust or registered pension scheme
- earn income overseas or live overseas and earn money in the UK
- need to claim tax relief on pension contributions
- exceeded the personal tax allowance when the state pension was your only income
- wish to make voluntary Class 2 National Insurance contributions
- are requested to complete a return by the HMRC
The deadline for submitting a self assessment tax return online is 31 January each year. You need to submit the return for the last self assessment tax year, which runs from 6 April to 5 April. For example, the tax return for 6 April 2020 to 5 April 2021 should be submitted by 31 January 2022.
Going digital for tax can give you some more time to complete self assessment tax returns and make your National Insurance and tax payments. It can also be easier to submit self assessment tax returns online, especially if you’re working with an accountant or tax service.
If you fail to file self assessment tax returns by the deadline then you can be fined £100 even if you still manage to pay your taxes on time. Additional penalties can be charged if you don’t file your late tax return after three, six, and 12 months or if you are late paying your self assessment tax bill. You could also be penalised if HMRC believe you are deliberately withholding information or avoiding taxes.