Updated: Jan 30, 2021
What is it?
Self Assessment is a system that HM Revenue and Customs (HMRC) use to collect Income Tax. It is usually deducted automatically from wages, pensions and savings, but people and businesses with other income must report it in a tax return. If you need to send one, you fill it in after the end of the tax year (5 April) it applies to.
Why is it required?
HMRC are required to collect income tax on behalf of the Government. It's used to help provide funding for public services such as the NHS, education and the welfare system, as well as investment in public projects, such as roads, rail and housing.
Who is it for?
You must complete a self assessment tax return if, in the last tax year (6 April to 5 April), you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on) or were a partner in a business partnership.
You will not usually need to send a return if your only income is from your wages or pension. But you may need to send one if you have any other untaxed income, such as money from renting out a property, tips and commission, income from savings, investments and dividends or any foreign income.
You can choose to fill in a tax return if you wish to claim some Income Tax reliefs or prove you’re self-employed, for example to claim Tax-Free Childcare or Maternity Allowance.
If your income (or your partner’s, if you have one) was over £50,000, you may need to send a return and pay the High Income Child Benefit Charge.
How can it be filed?
If you have not filed one before then you will need to register with HMRC. I have a FREE Self Assessment eBook that you can download which contains a step-by-step on how to do this and everything you will need for filing.
When does it need to be filed by?
You submit tax returns for tax years, not calendar years, and you do this in arrears.
For example, for the 2019/20 tax year, running 6 April 2019 to 5 April 2020, you would:
need to register for Self Assessment by 5 October 2020 if you’ve never submitted a return before
submit your return by midnight 31 October 2020 if filing a paper tax return
submit your return by midnight 31 January 2021 if filing online
pay the tax you owe by midnight 31 January 2021.
There’s usually a second payment deadline of 31 July if you make advance payments towards your bill (known as ‘payments on account’).
If you fail to meet one or more of these deadlines, you might be charged a penalty fee.
What happens if I fail to file on time?
You’ll get a penalty of £100 if your tax return is up to 3 months late. You’ll have to pay more if it’s later, or if you pay your tax bill late. You’ll also be charged interest on late payments.