Who has to complete a Self Assessment tax return?
If you are in Self Assessment, you must complete a tax return each year, on which you need to show your income and capital gains, as well as claim any applicable allowances and reliefs. We explain how this may apply to you below.
What is Self Assessment?
Under Self Assessment, certain taxpayers must complete a tax return (sometimes known as a form SA100) each year, on which they need to show all their income and capital gains, as well as claim any applicable allowances and reliefs. A tax return is a legal document and it is important not to leave out any sources of income – no matter how small (unless less than £1) or if tax has been deducted at source.
Most employees working in the UK pay all their tax through the PAYE system and are not required to file a tax return. However, you may need to complete a tax return because, for example, you have income from abroad or your tax affairs are complicated in some other way.
As a migrant, you do not normally have to complete a Self Assessment tax return if:
- your only income is from your job in the UK; and
- all of your income and any expenses and benefits are dealt with under the Pay As You Earn (PAYE) system, so that all the tax that you owe is collected under PAYE; and
- you have no overseas income or capital gains.
Who has to complete a Self Assessment tax return?
If you are self-employed, you always have to complete a Self Assessment tax return (unless your trading income is exempt under the trading allowance). It does not matter whether you make a profit or loss from your self-employment, or indeed whether you actually begin to trade as self-employed once you have registered.
If you have income or gains arising outside the UK you are also likely to have to complete a tax return.
In the UK, the onus is generally on the taxpayer to tell HMRC if they think they need to complete a tax return. You can find out what to do if you have not completed a tax return before and think you need to do so in the tax basics section.
You should also be aware that you may have to file a tax return even after you have left the UK.
How does Self Assessment work for the self-employed?
You must include all your income and gains on your tax return, not just those relating to the self-employment. This may include savings income, employment income, overseas income and capital gains, as well as details of your business income and expenses.
It is necessary to complete self-employment pages (known as SA103) in addition to the basic tax return (SA100). If annual turnover is less than £85,000 (2020/21), the short pages can be completed (SA103S), rather than the full pages (SA103F).
The tax return self-employment pages should be completed with details of the business income and various business expenses. For information on how to work out your business profits, visit the Working out profits, losses and capital allowances page in the self-employment section.
The taxable profits from your self-employment will help to determine how much income tax and Class 4 National Insurance contributions (NIC) you have to pay. Your Class 2 NIC bill is calculated differently, even though you will usually pay it through your tax return at the same time as your tax and Class 4 NIC. It is based on the number of weeks of self-employment you had in the tax year.
If the tax return is completed online, the online system will calculate the income tax liability.
There is more information about Self Assessment for the self-employed in the self-employment section.
There is also more information on Self Assessment for the self-employed on GOV.UK.
What are the important Self Assessment deadlines and dates?
To find more information on the deadlines for submitting Self Assessment tax returns, and paying income tax and NIC, visit our page What dates are important for self-employment?.
You should be aware that automatic interest and penalties apply for failure to file your tax return and pay your tax on time. HMRC have a tough penalty regime for tax returns that are filed late – even if you have no tax to pay or are due a refund.
What records do I need to keep?
There is a legal requirement for people in Self Assessment to keep records.
How does Self Assessment work if I am an employee and I have foreign income or gains?
Some migrants working in the UK have to complete a formal tax return each year – even if they are not self-employed and have all their employment taxes dealt with under PAYE.
This is usually the case where they are tax resident in the UK and have foreign income and gains.
On the page Do I have to complete a tax return? in our residence and domicile pages we explain whether or not you have to complete one.
With regards to record-keeping, the extent and nature of the records you need to keep depend upon your personal circumstances. You might need to keep records and comments to support your residence or domicile status, information about your foreign income and gains and some quite detailed records if you use the remittance basis of taxation, including bank statements.
You will need to keep them somewhere safe for at least 22 months from the end of the tax year. For example, for tax year 2020/21 (year to 5 April 2021), you need to keep records until at least 31 January 2023.
Can I ever get out of Self Assessment once I am in it?
If you are issued with a notice to file a tax return and you do not consider you need to complete one, because, for example, your tax affairs are no longer complicated, you can phone HMRC and ask for the tax return to be withdrawn and to be removed from Self Assessment in the future.
If you think this applies, you should contact HMRC as soon as possible. Remember that if you have been issued with a notice to file a tax return, you have a legal obligation to complete one (and penalties will be issued if you fail to do so) until that notice is formally withdrawn, even if you do not meet the Self Assessment criteria.
If you do not think you should be completing tax returns anymore because you have ceased self-employment or left the UK, you will need to fill in a tax return for the year your self-employment ends or the year that you leave. The date that you stopped being self-employed or departed the UK should be shown on the tax return, so HMRC can close your Self Assessment record and stop sending you tax returns to complete. You should always ensure HMRC have your correct address on record, even if this is overseas. If HMRC issue you with a notice to file a tax return for a year, even if this is after you have left the UK or your self-employment has ceased, they will expect to receive one until notified otherwise.
You can find contact details for HMRC on GOV.UK.
For more information on what to do when you stop self-employment, see GOV.UK.
For more information on what to do when you leave the UK, see GOV.UK.