How to file self assessment tax return?

PHS Team

20 Dec, 2024

Self assessment tax returns may seem Important, but it is important for freelancers, sole traders, and anyone earning income outside of regular employment. If you’re self-employed, a freelancer, or generate income from investments or rental properties, you must report your earnings to HM Revenue and Customs (HMRC). This process ensures that you pay the correct amount of tax and helps maintain compliance with UK tax laws.

A self assessment tax return is a form that allows you to declare your earnings and expenses for the tax year. By filing this return, you ensure that you pay the correct amount of tax and can take advantage of any deductions you’re entitled to. 

Therefore, Understanding how to file your self-assessment keeps you compliant with tax regulations and helps you manage your finances effectively. In this blog, we explain the important steps to successfully filing your self-assessment tax return, making the process straightforward and manageable.

What are Self Assessment Tax Returns?

A self assessment tax return is a system used by HM Revenue and Customs (HMRC) in the UK to collect income tax from individuals who earn money outside of traditional employment. If you are self-employed, a freelancer, or receive income from sources such as rental properties or investments, you must file a self assessment tax return each year. This process allows you to report your earnings and expenses, ensuring that you pay the correct amount of tax.

The self assessment tax return consists of various forms, with the main one being the SA100. This form requires you to provide details about your income, allowable expenses, and any other relevant financial information for the tax year. By accurately completing this return, you can calculate your tax liability and determine if you owe money to HMRC or if you are due a refund.

Filing your self assessment tax return is important not only for compliance with tax laws but also for managing your finances effectively. It allows you to claim deductions for business expenses, which can reduce your overall tax bill. Therefore, this process is important for anyone who earns income outside of a standard paycheck.

Who Needs to File a Self Assessment Tax Return?

You need to file a Self Assessment tax return in the UK if you are self-employed, earn over £1,000 in untaxed income, receive rental income, are a company director, or have complex tax events, such as earning from foreign or exceeding £100,000 in income.

Criteria for Mandatory Filing

1. Self-Employment: If you are self-employed and earned more than £1,000 in a tax year, you must file a return.
2. Partnerships: Partners in a business partnership are required to submit a self assessment.
3. High Income: If your total taxable income exceeds £150,000, you need to file a return.
4. Capital Gains Tax: You must file if you have capital gains tax to pay from selling assets.
5. High Income Child Benefit Charge: If your income is over £50,000 and you receive child benefit, you need to file.

Situations Requiring Self Assessment

1. Property Income: If your rental income exceeds £2,500, you must file, and contact HMRC if it’s between £1,000 and £2,500.
2. Untaxed Income: If you earn more than £2,500 from tips or commission, a return is necessary.
3. Foreign Income: Any foreign income that requires UK tax must be reported.
4. Investment Income: If your savings and investments generate £10,000 or more before tax, you need to file.
5. Trusts and Estates: Receiving income from a trust or estate may also require filing a return.

Registration for Self Assessment

Register for Self Assessment online with HMRC if you’re self-employed, earning untaxed income, or meet specific criteria. The deadline is 5 October following the end of the tax year you need to file for.

How to Register 

1. Create a Government Gateway User ID: If you are self-employed, the first step in registering for self assessment is to create a Government Gateway user ID on the HMRC website. This online account allows you to access various HMRC services, including self-assessment. If you already have a business tax account, log in with those credentials.

2. Complete the Registration Form: After logging in, fill out the online registration form with your details, including your name, National Insurance number, date of birth, home address, and the nature of your business. For individuals who are not self-employed, you will need to complete form SA1, which can be submitted online or printed and mailed to HMRC. 

Unique Taxpayer Reference (UTR) 

For successful registration, HMRC will issue you a Unique Taxpayer Reference (UTR), a 10-digit code that uniquely identifies you for tax purposes. This number is important for filing your self assessment tax return and remains unchanged throughout your lifetime. You can find your UTR on tax documents from HMRC, such as previous tax returns or notices.

Gathering Required Information

To file your Self Assessment tax return, gather documents related to income, expenses, and tax reliefs. Accurate records ensure correct calculations and help avoid penalties.

Essential Documents Needed

Before filing your self assessment tax return, gather the following necessary documents:

• National Insurance Number: This is required for identification purposes.
• Income Statements: Collect records of all income sources, including employment wages, rental income from properties, and investment earnings.
• Business Records: If you are self-employed, maintain detailed records of all business expenses and income to accurately report your earnings.

Understanding Income Sources

It’s important to understand all the income sources that must be reported in your tax return:

• Self-Employment Income: This includes profits earned from your business activities.
• Rental Income: Earnings generated from properties you rent out.
• Investment Income: Dividends or interest earned from investments.
• Other Income: Any additional income sources such as freelance work.

Filling Out the Tax Return

Filing your Self Assessment tax return involves reporting all income, claiming expenses, and calculating tax due. Complete it online or in paper forms before the deadline.

Overview of the Main Tax Return (SA100)

The SA100 form is the primary self assessment tax return used to report taxable income to HMRC. It consists of several sections where you provide personal details, declare income from various sources, and calculate your tax liability. You can file the SA100 online for convenience or submit a paper version if preferred.

Completing Supplementary Pages

Depending on your specific situation, you may need to complete supplementary pages alongside the SA100. These additional forms are used to report specific types of income. For example:

• SA105 for rental income,
• SA103 for self-employment profits.

Ensure that all sections are filled out accurately to avoid delays or penalties from HMRC. Completing these forms correctly is important for a smooth filing process and compliance with tax regulations.

Key Deadlines of self assessment tax return

Deductions and Allowable Expenses

When filing your self assessment tax return, it’s important to understand the deductions and allowable expenses that can reduce your taxable income. Here are some key points to consider:

Common Deductions for Self-Employed Individuals

1. Business Expenses: You can deduct costs directly related to running your business, such as office supplies, equipment, and utilities.
2. Travel Expenses: Costs experienced for business travel, including distance, public transport fares, and accommodation, can be claimed.
3. Home Office Costs: If you work from home, you can claim a portion of your household bills (like electricity and internet) based on the space used for business.
4. Professional Fees: Membership fees for professional bodies or subscriptions to industry-related publications are deductible.
5. Training Costs: Expenses for courses or training that increase your skills relevant to your business can also be claimed.

Special Considerations for Property Income

1. Repairs and Maintenance: Costs for necessary repairs to your rental property are deductible, but improvements that increase value are not.
2. Mortgage Interest: You can deduct the interest on loans taken out to purchase rental properties.
3. Letting Agent Fees: If you use a letting agent, their fees are allowable expenses.

How to Avoid Mistakes and Penalties 

To avoid mistakes and penalties in tax or business-related matters, follow these key steps:

1. Understand Your Responsibility: Familiarise yourself with the self assessment process, including who needs to file and the deadlines involved. Knowing your responsibilities helps prevent mistakes.
2. Keep Accurate Records: Maintain detailed records of all income and expenses throughout the year. Use accounting software or spreadsheets to track your finances, making it easier to compile information when it’s time to file.
3. Double-Check Your Information: Before submitting your tax return, review all entries for accuracy. Ensure that your income figures match your records and that you haven’t missed any allowable deductions.
4. Use the Correct Forms: Make sure you’re using the right tax return form for your situation. Different forms apply to various types of income, so select one that accurately reflects your financial conditions.
5. File on Time: Submit your tax return by the deadline to avoid late fees and penalties. Set reminders for key dates, such as registration and submission deadlines.
6. Seek Professional Help if Needed: If you're unsure about any aspect of the process, consider consulting a tax professional or accountant. Their expertise can help you navigate complexities and avoid costly mistakes.

Tips for Successful Filing

Following are the tips for successful filing for self assessment tax return:

1. Start Early: Begin gathering your documents and information well before the deadline. This gives you ample time to address any issues that may arise.
2. Stay Organised: Keep all your financial records, receipts, and tax documents in one place. Use folders or digital tools to categorise income, expenses, and other relevant paperwork.
3. Use Reliable Software: Consider using reputable accounting software or online tax filing services. These tools can simplify the process and help you avoid common mistakes.
4. Double-Check Your Entries: Carefully review all information before submitting your tax return. Ensure that figures match your records and that you haven’t missed any income sources or deductions.
5. Keep Copies of Everything: After filing, retain copies of your tax return and all supporting documents for at least five years. This is important in case HMRC requests further information or if you need to revise your return.
6. Seek Professional Help if Needed: If you're unsure about any aspect of the filing process, don’t hesitate to consult a tax professional. Their expertise can help you navigate complexities and ensure accurate filing.
7. Set Reminders for Future Deadlines: Use calendar reminders to keep track of important dates for future tax years, ensuring timely registration and submission.

Filing your self assessment tax return is an important responsibility for anyone with income outside of regular employment. By understanding the registration process, gathering the necessary information, and attaching to deadlines, you can navigate this task with confidence.

Start by registering with HMRC before the deadline of October 5 if you haven't filed before. Collect all required documents, including your Unique Taxpayer Reference (UTR), income statements, and records of expenses. This preparation will help ensure that you report your income accurately and claim any allowable deductions.

When filling out your tax return using the SA100 form, be thorough and double-check your entries to avoid mistakes that could lead to penalties. Remember to submit your return by January 31 for online filings or October 31 for paper submissions.

By staying organised and informed about the self assessment process, you can fulfil your tax responsibility efficiently.  We provide a range of important services designed to support businesses in managing their financial and operational needs effectively. Here’s how they can help you.

With a team of highly qualified professionals, We offer comprehensive accounting services tailored to your specific requirements. They ensure accurate bookkeeping, tax preparation, and financial reporting, allowing you to focus on growing your business.

If you are looking for accountants to file self assessment tax returns contact us at 0208 8611685 and email at info@phs-uk.co.ukn