Self Assessment: understanding the basics

Updated on 19 July 2021

This page helps people understand the basics of Self Assessment – a way of paying tax by sending a tax return to HMRC each year.

Image of hexagons depicting self assessment icons

What is Self Assessment?

You tell HMRC about your taxable income and gains for a tax year by completing a Self Assessment tax return. Part of the process is to work out and pay what you owe.

This page gives an idea of how it works. More detail can be found elsewhere on our website – see at the end: Where can I find more information or get help?

When do I have to complete a Self Assessment tax return?

⚠️ You must fill in a tax return if HMRC have sent you a ‘notice to file’ asking you to do so. This is the case unless HMRC agree to cancel the return.

If you receive any untaxed income, you might need to complete a tax return.

Common situations are:

  • you are self-employed (unless this income is within the annual £1,000 trading allowance)
  • you are a partner in a business
  • you are a company director and have income on which tax is due that is not taxed under Pay As You Earn (PAYE)
  • you have property income – for example, you are renting out a room, a garage or a whole property to someone else (unless this income qualifies for rent-a-room relief or is within the annual £1,000 property allowance)
  • you want to claim tax relief on employment expenses over £2,500 in a year
  • you have to pay a tax charge on your child benefit, known as the ‘high income child benefit charge
  • you have untaxed savings income. HMRC might be able to collect any tax due on small amounts without you doing a full tax return, but should always tell them about savings income of more than £1,000 a year (or £500 if you pay tax at the higher rate) and dividends of more than £2,000 a year
  • you have capital gains tax to pay which hasn’t already been paid in-year

This is not a complete list. See also Where can I find more information or get help?

GOV.UK has a tool which asks you questions and, based on your answers, tell you if you need to complete a tax return. You should keep a copy of your answers and the result it gives you.

⚠️ Note, however, if the tool advises that you do not need to complete a tax return but HMRC have sent you one to complete, then you will need to ask HMRC to cancel the filing requirement otherwise you may be charged penalties.

If you are already late in filing your tax return and you have been charged late filing penalties, but the tool advises that you do not need to complete a tax return for that year, then you should ask HMRC to cancel the filing requirement. If they agree to do so, then the late filing penalties will be cancelled automatically. It is important to attempt to do this before filing the return, because after you have submitted a return, HMRC cannot cancel the late filing penalties in the same way and you must appeal against them instead.

Selling a property?

If you are a UK resident and sell a UK residential property and you have capital gains tax to pay after 5 April 2020, you have to tell HMRC and pay the tax within 30 days. Similar rules apply to non-residents selling any UK land or property, even if there is no tax to pay.

Do I have to complete a Self Assessment tax return if I have no tax to pay?

As we highlight above, you have a legal obligation to submit a tax return if HMRC have asked you to and they have not cancelled or withdrawn that requirement. This is regardless of your circumstances.

If HMRC have not asked you to file a tax return for a year, then you might have a separate legal duty to notify them that you are liable to income tax, capital gains tax, or Class 2 or 4 National Insurance so that they can issue you with a return to complete, or otherwise collect the amounts due some other way. However, there are a number of exceptions to this obligation to notify – for example, where you had no chargeable gains and all of your income was taxed under PAYE.

We do not believe that this legal requirement extends to notify HMRC of a non-existent liability to income tax, capital gains tax, or Class 2 or 4 National Insurance contributions – in other words, where you do not owe anything to HMRC. In any case, there can be no penalty for not doing so. For example, you may have gross trading income of £5,000 (with no expenses) and no other income or gains in a tax year. Although your trading income would exceed the trading allowance, there would be no tax or National Insurance due on this income because it does not exceed the relevant thresholds.

However, there are a number of reasons why you might wish to complete a return even if you have no tax or National Insurance liability, including:

  • in order to pay voluntary Class 2 National Insurance contributions;
  • in order to report a trading or capital loss; or
  • so that you have evidence of your income, which may be required for mortgage applications or claims to coronavirus support payments.

It is important to stress that if HMRC have asked you to complete a return, you will still need to complete one in these circumstances – even if you have no tax or National Insurance liability. HMRC may not agree to withdraw the filing requirement if you meet their own Self Assessment criteria. For example, HMRC will not typically agree to withdraw a filing requirement if your trading income exceeds the trading allowance.

How do I register for Self Assessment?

You must usually register with HMRC for Self Assessment by 5 October following the end of the tax year in which the income or gains first arose, otherwise penalties may be applicable.

If you have reported a property disposal within 30 days, you may still need to register separately for Self Assessment.

See Where can I find more information or get help? for links to how to register online.

How do I register for Self Assessment? by LITRG

When must I send my tax return to HM Revenue and Customs?

This depends on the date of issue of the notice that HMRC send you to tell you to complete a tax return and whether you complete your tax return on paper or online.

The table below summarises the position for 2020/21 returns (the tax year which ended on 5 April 2021).

If you owe less than £3,000 for the year and want HMRC to collect this by adjusting your PAYE code, you have to submit a paper return by 31 October or an online return by 30 December. So for 2020/21, this means submitting your online return by 30 December 2021 for the tax to be collected via your 2022/23 PAYE code. Note that the date is 30 December, not 31 December.

If you do not submit your tax return by the due date, then you will automatically be charged a late filing penalty of £100. HMRC continue to charge penalties the longer you delay.

See What penalties can I be charged under Self Assessment? for more information.

Date of tax return or data notice to file issued

Deadline for submitting paper return

Deadline for submitting return to HMRC to
calculate tax (paper returns only)

Deadline for submitting return online

On or before 31 July 2021

31 October 2021

31 October 2021

31 January 2022

1 August 2021 to 31 August 2021

3 months from date of notice

31 October 2021

31 January 2022

1 September 2021 to 31 October 2021

3 months from date of notice

2 months from date of notice

31 January 2022

After 31 October 2021

3 months from date of notice

2 months from date of notice

3 months from date of notice

HMRC Notice to file a Self Assessment tax return by LITRG

What information do I need to complete my tax return?

Your tax return for any tax year must contain details of all that year’s taxable income and gains. Here are some typical things you might need:

✔️

Details of self-employment income and expenses, to work out your trading profit or loss for the year

✔️

Details of property income and expenses, to work out your rental profit or loss for the year

✔️

Employment and pensions income information, including forms P60, P11D and P45 from any jobs you have had

✔️

Interest certificates from banks or building societies

✔️

Details of pension contributions made to relief at source schemes

✔️

Details of any chargeable capital gains made in the year


You need to keep records of your taxable income and gains to be able to complete the tax return. You do not have to send original documents to HMRC, but if HMRC ask questions later, you might need them as back-up and to show you took reasonable care to get your return right.

For self-employed and property income, you need to be able to show how you have worked out your profit.

So, you need to keep things like:

  • invoices (bills) for work you have done
  • receipts for expenses paid
  • bank statements
  • statements from letting agents (or details of rental income for property if you do not use an agent)
  • information showing how you have taken account of any private use of things used in the business (for example, mileage logs for a vehicle used both in the business and privately).

If you are self-employed or rent out a property, you must keep records which support your tax return for five years after the normal 31 January deadline. If you are not self-employed and have no income from property, and you file on time, you need only keep records for 12 months after the same deadline, or otherwise 15 months if you file late.

You can keep your records on paper or digitally. But be aware that HMRC are planning to introduce a system in which you have to keep digital records for things like trading and property income. It is a good idea to start thinking about this now, so you are ready for it in future.

How do I work out my Self Assessment bill?

A key part of Self Assessment is calculating your own tax (and, if appropriate, National Insurance and student loan repayments) for the tax year and including this on the tax return. This does not have to be as daunting as it sounds.

It works slightly differently depending on how you send in your return.

But whether you do it online or on paper, look through the calculation yourself, as it can help you spot mistakes (made either by you, or sometimes by HMRC).

Online returns

HMRC’s system (or third-party software if you choose to use it) will calculate how much you owe.

Paper returns

HMRC will work out how much you owe based on the entries on the tax return and send you the tax calculation. Provided you submit the paper return by the due date (see above) then HMRC guarantee they will let you know what payment you need to make before it becomes due.

However, if you submit the return late, then although HMRC will still do the calculation for you, they cannot be sure this will be done in time for you to make the right payment by the due date.

Therefore, if you submit a paper tax return late, you run the risk of also making the Self Assessment payment late, for which penalties and interest may become payable. These are on top of penalties for late filing.

When do I pay the tax due and what payment options are there?

Usually Self Assessment payments (which can be made up of tax, National Insurance and student loan repayments) are due by 31 January following the end of the tax year to which they relate. So tax due for the 2020/21 tax year is due for payment by 31 January 2022.

Some taxpayers need to make instalment payments towards their annual Self Assessment bill for the following year.

These are called payments on account and generally speaking, if you come within the payment on account regime you will need to make payments on 31 July in each tax year as well as on 31 January.

It can be quite tricky to get to grips with payments on account, and if you are having trouble understanding your payments, we explain the rules in detail in our self-employment section.

If you are liable to payments on account, the typical payment cycle looks like this:

Self Assessment payment options by LITRG

⚠️ Note: Payments on account which were due on 31 July 2020 were deferred as a result of the coronavirus pandemic and were due on 31 January 2021 (at the same time as any balancing payment for the 2019/20 tax year and the first payment on account for 2020/21).

For the latest, visit our coronavirus guidance.

There are various ways to settle any payments due and these include cheque, bank transfer, debit card, but not personal credit card. See Pay your Self Assessment tax bill on GOV.UK.

Make sure you have the correct reference number when you make any payment so HMRC correctly allocate it to your account. This will be your 10-digit UTR (Unique Taxpayer Reference) number, usually followed by the letter K.

What penalties can I be charged under Self Assessment?

There are four categories of penalty which might be charged under the Self Assessment regime.

All these penalties can be appealed, for example if you have a reasonable excuse, special circumstances apply, or you took reasonable care to get your tax right. If you make an appeal, you must usually do so within 30 days of the date of the penalty notice. Interest will also be charged for late paid tax.

Type of penalty

Automatic?

Description

Late filing

Yes

Starting with £100 and increasing to £1,600 per year or more

Late payment

Yes

Calculated according to the amount of unpaid tax at the due date

Failure to notify

No

Normally calculated according to the amount of tax unpaid as a result of the failure on 31 January following the tax year

Inaccuracy

No

Calculated as a percentage of unpaid tax as a result of the inaccuracy


For taxpayers within Self Assessment, a new penalty regime for late filing and late payment is expected to be introduced from 6 April 2024 (or potentially earlier, if you fall within scope of Making Tax Digital for Income Tax).

What if I can’t pay the tax due?

If you are having difficulty meeting a tax bill or know that you will have difficulty paying a bill that becomes due in the near future, you should contact HMRC as soon as possible.

HMRC can allow you to spread payments over a period of months depending on your personal circumstances and what you can afford to pay.

If you agree with HMRC to spread your payment over a period of time and stick to it, you should not be charged late payment penalties.

Where can I find more information or get help?

There are several sources of general help if you get stuck with Self Assessment:

If you have a more specific query relevant to your personal circumstances, you will need to contact HMRC. You can do this via telephone or, if available, webchat. Visit the Self Assessment: general enquiries page on GOV.UK.

If you call HMRC on their Self Assessment helpline (0300 200 3310, textphone 0300 200 3319) the adviser will either deal with your query or arrange for a call back from a specialist adviser. If you need more support to be able to complete the return then HMRC should refer you to their specialist team, the Extra Support Team, who are available to help those who are struggling to deal with their tax affairs in a variety of ways.

You may also be able to get assistance from voluntary sector organisations, such as the tax charities: TaxAid or Tax Help for Older People. More information can be found on our Getting Help page.

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