Self Assessment is the way in which you tell HRMC about your income, and calculate how much tax you're liable to pay.
This guide covers the basics of what can feel like an overwhelming task, but is essential to understand and get ahead of.
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Self-assessment is the way you tell HMRC how much money you’ve made and how much tax you owe.
It’s basically a set of questions you answer about your income, expenses, and how much tax you’ve calculated that you owe.
It’s called self-assessment because you do it yourself - HMRC don’t tell you what you owe, you work it out yourself.
People in employment generally don’t need to do self-assessment, as tax is calculated for them by their employer.
But everyone in self-employment is required to complete self-assessment, because their income is not taxed at source.
You need to register for self-assessment if you’re generating income over £1000 in a year which is not taxed at source.
This includes if you’re a freelancer, but also things like property income, selling goods on vinted or ebay, etc.
If you’re making more than £1000 in a year that isn’t taxed at source, you need to register for self-assessment.
You must register for self-assessment by 5th October after the end of the tax year where you received self-employed income.
Let’s say you started working on May 12th, 2023 (which is tax year 2023/2024) - the tax year ends on 5th April 2024.
You then will have needed to register for self-assessment by 5th October 2024, and complete your self-assessment and pay any liabilities by 31st January 2025.
Let’s say you started working on January 1st, 2025 (which is the tax year 2024/2025) - the tax year ends on 5th April 2025.
You then need to register for self-assessment by 5th October 2025, and complete your self-assessment and pay any liabilities by 31st January 2026.
So, if you’ve only just started freelancing - you have some time.
However, we recommend you register as soon as possible after starting self-employment, so you are prepared in good time, rather than worrying about things at the last minute.
(If you’re planning on completing a paper self-assessment, the deadlines are different, but doing it online is much simpler).
HMRC make it really easy to register for self-assessment.
Just jump online, and follow the instructions here → https://www.gov.uk/register-for-self-assessment
If you’re working with an accountant, they can help you with this too.
You’ll be sent something called a Unique Taxpayer Reference (UTR), which you’ll need to keep safe - this is your ID for every time you need to submit any details regarding your self-assessment and self-employment, as well as logging into your HMRC account.
You need to complete and submit your self-assessment by January 31st after the end of the tax year.
So, if you started working on May 12th, 2023 (which is tax year 2023/2024) - the tax year ends on 5th April 2024. You then need to submit your self-assessment and pay any liabilities by 31st January 2025.
If you started working in January 2025 (which is tax year 2024/2025) - the tax year ends on 5th April 2025. You then need to submit your self-assessment by 31st January 2026.
You’ll need to complete and submit your tax return every subsequent year by January 31st.
However, you can submit your self-assessment any time after April 6th of each year, so you have plenty of time to get it done.
We recommend completing your self-assessment as soon as possible after the end of the tax year, so it’s done, and you know how much tax and you owe.
Put a reminder in your calendar for the end of the tax year, and another deadline ahead of the January 31st date, to give yourself plenty of time to get it done.
If you’re working with an accountant, it’s likely they’ll remind you when you need to get your self-assessment completed too.
If you’re using online accounting software, it also will have useful reminders and notifications to help you complete your self-assessment on time.
Most likely, you’ll be completing your self-assessment online.
You can do this through your HMRC account at https://www.gov.uk/log-in-file-self-assessment-tax-return
You can also submit your self-assessment through third-party software like FreeAgent, Quickbooks, or Xero.
The SA100 form is the main tax return, and you’ll need to complete this first. This will ask you a number of questions about your income and expenses - you’ll need to have your records to hand, to complete the forms accurately.
If you’re self-employed, you’ll most likely also be completing SA103S - which are supplementary pages for self-employed people.
You may also need to complete other supplementary pages, depending on your circumstances and sources of income, or if you’re a company director (SA102).
It’s important to check which supplementary pages you need to complete, as you may need to complete more than one.
You’ll be asked to provide your Unique Taxpayer Reference (UTR), and then asked a number of questions about your income - so you’ll need to have your records to hand, to complete the forms accurately.
You don’t have to complete your self-assessment in one go - you can save your progress and come back to it later, so it’s sensible to get started as soon as possible, so you can take your time.
The HMRC website provides really useful guides to helping you understand and complete your self-assessment.
There are also many very useful guides and resources online, which we’ve linked to below.
You may want to consider working with an accountant to help you complete your self-assessment, to provide expert advice and guidance, especially for your first year. Many accountants offer one-off support to help you complete your tax return, which can save you a lot of time, and help you avoid any mistakes or penalties.
Once you’ve completed the the pagess of your tax return using the online tools provided by HMRC (or your online accounting software), you’ll be provided with a calculation of how much tax you owe.
It will include your income tax, Class 4 National Insurance Contributions, and Class 2 national insurance contributions if they’re due.
If the amount of income tax and NIC is more than £1000, you will be required to make a payment on account.
You will need to pay any dues by January 31st after the end of the tax year.
This is the same deadline for submitting your self-assessment tax return.
In your first year of trading, you’ll be required to pay your first year’s tax bill in full by January 31st, and then make payment on account for the following year: 50% of the following year’s estimated tax bill will also be due on January 31st.
If you’re paying on account, you’ll be paying your tax in two instalments - one by January 31st, and one by July 31st, to help you spread the cost of each years tax.
If you have underpaid or overpaid tax (based upon variation in your income), your payment on account will be adjusted accordingly.
Payment on account can be confusing, but once you’ve submitted your self-assessment, it’ll be clear on what you are due to pay, and when.
Working with an accountant can help you understand what is due, well in advance of the deadlines, so you can ensure you have sufficient funds to pay your tax.
Hopefully you’ve been putting aside money from each invoice you receive, so you have funds to pay your tax.
If you miss the deadline to register, submit your return or pay your bill – you’ll get a penalty.
You’ll pay a late filing 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 any late payments.
It’s essential to ensure you register, submit your return, and pay your tax bill on time, to avoid any penalties.
If you have an outstanding payment, or are worried you might miss a future payment call the HMRC Time to Pay helpline on 0300 200 3822.
If you can’t afford to pay your tax bill, you need to contact HMRC as soon as possible by calling the Business Payment Support Service on 0300 200 3825. This line is for everyone, not just for businesses.
HMRC are incredibly helpful, do not feel embarrassed or worried about contacting them - they are there to help.
There are lots of ways to pay your tax bill - through a bank trasnfer, using online or telephone banking, using a debit card, or even setting up a direct debit.
There’s a simple guide at HRMC with all of the details you’ll need to know here: https://www.gov.uk/pay-self-assessment-tax-bill
You’ll need to make sure payments arrive before the deadline, and payments can take up to 5 working days to clear.
You can check that your payment has been received by logging into your HMRC account.
Completing your self-assessment is a mandatory legal requirement if you’re earning over £1000 in a year.
It is not something you can ignore, and whilst it can feel daunting, it should be relatively straightforward if you have your records to hand.
Don’t avoid getting your self-assessment completed - start it as soon as possible, so you can take your time, and don’t feel rushed close to the deadlines.
There is a great deal of help available to you, including the HMRC website, which provides clear guidance and support.
You may also consider working with an accountant to help you complete your self-assessment, to provide expert advice and guidance, especially for your first year.
Many accountants offer one-off support to help you complete your tax return, which can save you a lot of time, and help you avoid any mistakes or penalties.
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