Everything you need to know about self-assessment tax returns

With the self-assessment tax return deadline on the horizon, we highlight what you need to be aware of in order to avoid mistakes and penalties.

Self-assessment tax return
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Most of us have to pay income tax, and millions of us have to file self-assessment tax returns each year.

Whether it’s because you’re self-employed or enjoy some other form of untaxed income - or maybe you need to pay back child benefit - a self-assessment tax return is crucial, allowing you to update HM Revenue & Customs on your earnings over the year as well as paying any tax that is due.

And with a new year just around the corner, we are heading towards the deadlines for filing your return and paying those tax bills.

Here we run through everything you need to know about your self-assessment tax return.

Self-assessment tax returns - what you need to know

Who has to file a self-assessment tax return?

All sorts of different people have to file a self-assessment tax return each year.

Primarily, people that file a self-assessment are the self-employed, whether they work as sole traders or within a limited company that they have established.

But, there are plenty of other people who have to file a return too, even if they are employed in a regular job. These are likely to be people with some form of untaxed income. Examples include those who make money from renting out property, earn tips and commission, or who receive a foreign income.

What’s really important is that you don’t wait to be contacted by the taxman about filing a self-assessment tax return ‒ if you know that you are going to owe money on some form on untaxed income, you need to be proactive and register for a tax return.

How do I register to file a self-assessment tax return?

Before you file a self-assessment tax return for the first time, you need to register with HM Revenue & Customs. This had to be done by 5 October 2022 in order to file a tax return for the coming tax year deadline.

You can register online through the government’s website, though the actual process will vary based on your form of employment, such as whether you are self-employed, employed or in a partnership.

Once you have done this, you’ll be provided with a unique taxpayer reference (UTR) number. This is a number that you will need to refer back to in future, so be sure to make a note of it somewhere safe.

Once you have your number, you’ll also be sent activation details for an account on the government Gateway. The Gateway is an online platform used to file your tax return, so you’ll need to get set up there before you can complete your return and pay any tax that you owe.

This whole process can take a few weeks, so it’s important to give yourself plenty of time to get registered and comfortable with using the Gateway ahead of the tax deadline.

When do I have to file my self-assessment tax return?

The first thing to bear in mind is there are different deadlines in place, depending on how you file your tax return.

If you file your return online, then you have until 31 January of the following tax year. So for example, if you need to file a tax return for the 2021/22 tax year, then you have until midnight on 31 January 2023 to do so.

However, if you file your return by paper then there is an earlier deadline ‒ it will need to be with the taxman by the 31 October tax return deadline.

When do I have to pay my tax bill if I file a self-assessment tax return?

Irrespective of how you file your tax return, you have the same deadline for paying any outstanding tax. This is midnight on 31 January.

It’s really important to emphasise that leaving it to the last minute is a bad idea, however. Payments to the taxman can take a few days to go through, and you’ll be judged based on when HMRC receives your payment, not when you actually sent it. As a result it’s a good idea to make that payment at least a few days in advance of the deadline.

So busy is HMRC at this time of year that me people calling the department from a mobile phone with a routine question will have it answered by text message, rather than waiting to speak to someone, thanks to a new trial.

Texts will automatically be triggered, based on customers’ reasons for calling, and will include direct links to relevant online information.

HMRC believes the move will help to free up its advisers to deal with people with more complex queries as well as providing callers with a routine question with a better service.

Routine calls that will be answered with a text under the trial will include:

– People finding their unique taxpayer reference (UTR) number;

– Registering for HMRC online services;

– Lost or forgotten online service passwords or user IDs.

What happens if I file my tax return late?

There are penalties in place should you be late in filing your self-assessment tax return and paying the tax due.

You’ll be subject to a £100 fine if you miss the deadline and are late in paying by up to three months.

This penalty will increase if you are more than three months late, while you will also have to pay interest on the tax you owe if you are late making the payment.

However, you can appeal against a penalty if you have a reasonable excuse for having missed the deadline.

According to HMRC, examples of reasonable excuses include:

  • The death of your partner or a close relative shortly before the deadline
  • An unexpected stay in hospital
  • Your computer failing shortly before or while you were preparing your return
  • A fire, flood or theft preventing you from completing your return
  • Postal delays

What is a “payment on account”?

The tax system for self-employed people is rather different from that of those who are employed, with payments on account a good example of that difference.

Essentially the taxman estimates how much you are likely to have to pay in any given tax year, and you then pay that amount through two payments on account. Once your tax return has been filed and you know exactly how much you owe, you can either top it up or claim a refund if you’ve overpaid.

When you pay your tax bill for the previous tax year, you will also have to pay your first payment on account for the current tax year. So for the 2022/23 tax year, you’ll have to pay your first payment on account on 31 January, with a second payment on account to follow on 31 July.

HMRC calculates your payment on account based on your previous tax bills, and you are able to request to lower the payments if you feel you are likely to have a less significant income (and therefore tax bill) for the current year.

Will I have to pay back my child benefit through my self-assessment tax return?

The child benefit system in the UK is tied to our income, so you may need to return some of the payments through your tax return.

If you or your partner have an “adjusted net income” ‒ essentially your total taxable income ‒ of above £50,000 a year, then you will have to pay the “high income child benefit charge”. This works out at 1% of your child benefit for every £100 of income you earn between £50,000 and £60,000. The more you earn between those two points, the more child benefit you will have to repay.

If you earn over £60,000, you will have to pay the entirety of your child benefit back through the charge.

Importantly, the higher-earning partner is responsible for paying this charge, which can cause some confusion. For example, it might be that the mother receives the child benefit payments, but the father is then tasked with including the high income child benefit charge within their self-assessment tax return.

What expenses can I claim within my self-assessment tax return?

Unlike those in traditional employment, if you are self-employed and filing a self-assessment then you may be able to claim a range of expenses.

These have to be expenses that you have incurred entirely as a result of performing your job.

For example, you might want to claim subscriptions for industry publications or the money spent on purchasing a new laptop that you use exclusively for work.

You can also claim a contribution towards certain household expenses if you work from home, such as a portion of your energy bill. You will need to calculate how much of your energy use is as a result of your work, and then claim for that amount.

Alternatively, you can opt for the simplified expenses, where you can claim a flat rate based on the amount of hours you work from home each month. If you work between 25 and 50 hours a month you can claim £10, increasing to £18 for those working 51-100 hours and £26 for those working 101 hours or more.

These expenses can be deducted from the revenue you have enjoyed over the tax year. You will then pay tax on the remainder.

What if I make a mistake in my self-assessment tax return?

Given the importance of a self-assessment tax return, it’s crucial that you go through it carefully to ensure all of the information provided is accurate. But, mistakes do happen, so you will have the option of correcting your self-assessment tax return even after it has been filed.

You can quickly make a change yourself up to three days after you file your return, either through the Gateway platform if you filed your return online or by downloading a new form if you file your tax return through the post. With the latter, you will need to write the word “amendment” on each page so HMRC understands this is the correct version.

If you need to correct errors in your return after this date, you will need to write to HMRC. Within this you have to detail the tax year you’re correcting, why you think you have paid the wrong amount of tax, and how much you believe you have overpaid or underpaid.

You can claim refunds for up to four years after the end of a particular tax year.

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John Fitzsimons
Contributing editor

John Fitzsimons has been writing about finance since 2007, and is a former editor of Mortgage Solutions and loveMONEY. Since going freelance in 2016 he has written for publications including The Sunday Times, The Mirror, The Sun, The Daily Mail and Forbes, and is committed to helping readers make more informed decisions about their money.

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