What is Self Assessment?

Self Assessment is the system HMRC uses to collect Income Tax from self-employed sole traders, freelancers, members of ordinary business partnerships, company directors who receive taxable dividend payments, small private landlords, those with total taxable income of more than £150,000, people who need to pay Capital Gains Tax and others.

Employed people pay Income Tax and National Insurance contributions (NICs) via their company payroll/PAYE, they do not pay tax via Self Assessment unless they have self-employed, rental or other taxable income to report separately to HMRC.

Those who need to report taxable income via Self Assessment must complete and file a Self Assessment tax return (SA100), plus any necessary supplementary pages that detail specific sources of taxable income. Before you can file a Self Assessment tax return, you must be registered for Self Assessment. If you’ve registered for Self Assessment previously but didn’t file a tax return last year, you must register again to reactivate your account.

If you need to complete a tax return and haven’t sent one before, you must register for Self Assessment before 5 October following the end of the tax year (5 April) during which you earned taxable income. HMRC could fine you if you do not.

As the name suggests, Self Assessment means you self assess your own taxable income and any expenses you wish to claim by completing a Self Assessment tax return, which HMRC then uses to work out your tax bill.

If you need to complete and file a Self Assessment tax return, you can do so as soon as the tax year ends (5 April). If HMRC writes to you to ask you to complete and file a Self Assessment tax return, you must do so, even if you believe you don’t owe any tax.