A Guide On How To Do A Self-Assessment

In this guide, you will learn how to do a self-assessment. From registering on the HMRC website to submitting your final return in a tax-efficient manner, we've got you covered.

What is Self Assessment Tax?

Self assessment tax refers to income tax that you calculate and pay yourself. Rather than your employer deducting tax from your pay, you work out your tax liability based on your income and any allowances you're entitled to. You then pay any tax due by the deadline.

To get started with the assessment, you first need to register for a tax return. This can be done online via the HMRC website.

With Taxd, you can be diligent about reporting and paying what you owe to avoid potential penalties.

Do You Need to File a Tax Return?

You need to file a self-assessment tax return if:

• Self-employment income exceeds £1,000.
• Rental income is over £2,500.
• Untaxed income exceeds £2,500.
• Savings or investment income is £10,000+.
• You owe Capital Gains Tax.
• You're a company director.
• You or your partner's income exceeds £50,000 and you claim Child Benefit.
• You have taxable income from abroad or over £100,000.
• You received a P800 from HMRC for underpaid tax.
• You want to make voluntary Class 2 National Insurance contributions.

From April 2024, self-employed individuals with profits under £6,725 can choose to pay Class 2 NICs voluntarily.

Tax Rates in UK

To calculate your self-assessment tax, you'll need to determine your total taxable income for the tax year. This includes income from all sources like your job, investments, rent, business profits, etc.

Once you have the total taxable income amount, you can calculate your tax liability. For the 2024-25 tax year, the tax rates in the UK are:

• Basic rate: 20% on taxable income from £12,571 to £50,270.
• Higher rate: 40% on taxable income between £50,271 and £125,140.
• Additional rate: 45% on taxable income over £125,140.

You can check the gov.uk website for the latest tax rates each year. Multiply your taxable income by the appropriate tax rate to get your tax liability. For example, if you are earning £40,000 per year, you are actually only being taxed on £27,430. So your tax liability would be £5,486.

Once you’ve calculated your tax liability, you can make the tax payments via the HMRC website.

Tax Return Dates and Deadlines

• Register by: October 5 (if self-employed or need to declare untaxed income).
• Submit online by: January 31 (for the previous tax year).
• Payment deadline: January 31 for outstanding taxes.

You can set up a payment plan to pay in instalments if you can’t pay it all at once.

If in doubt, you can also use our tax software, Taxd, to help determine your tax liability and see if you qualify for any tax relief.

Self Assessment Tax Return Overview

A self assessment tax return has two parts:

SA100 (Main Section): Includes taxed/untaxed income (dividends, interest), pension contributions, charitable donations, and benefits (e.g., State Pension, Child Benefit, Blind Person's Allowance).

Supplementary Page: Required for income from directorships, foreign sources, self-employment, property, or capital gains.

You don’t need to fill out the short-form SA200 unless HMRC sends it.

SA100

• Income: Declare taxed/untaxed income like bank interest and dividends.

• Pensions/Benefits: Enter State Pension, annuities, and taxable benefits (e.g., Jobseeker’s Allowance).

• Other UK Income: Report additional taxable income and related expenses.

• Pension Contributions: List payments into pension schemes made after tax.

• Charitable Donations: Enter totals for Gift Aid and any charitable gifts (shares, land, etc.).

• Blind Person’s Allowance: Indicate if you’re claiming this allowance.

• Student Loan Repayments: Show loan deductions made by your employer.

• High Income Child Benefit Charge: Fill out if your income exceeds £50,000 and you received Child Benefit.

• Marriage Allowance: Complete if you wish to transfer part of your Personal Allowance to your spouse.

Supplementary Pages

If you have extra income from self-employment, property, or capital gains, you’ll need to complete the relevant supplementary pages on your tax return:

Self-employment (SA103):

• Income: Report your total turnover, which is all money earned before deducting expenses.

• Expenses: You can claim allowable expenses such as cost of stock, equipment, wages, travel, office costs, advertising, and legal fees. Keep receipts for five years for possible HMRC review. If your turnover is under £85,000, you can enter total expenses; over £85,000 requires detailed itemisation.

UK Property Income (SA105):

• Income: Separate your income from furnished holiday lettings and other rental properties. If renting through the Rent a Room Scheme, you can earn up to £7,500 tax-free. -
• Expenses: You can claim expenses for maintenance, repairs, loan interest, legal fees, and insurance costs related to the rental properties.

Capital Gains (SA108):

• Income: Declare income from the sale of assets like property or shares as "disposal proceeds."

• Expenses: Deduct allowable costs such as the original purchase price, improvement costs still present at the time of sale, and associated selling costs like Stamp Duty.

How to do a Self-Assessment Online?

Here are the steps to complete your self-assessment tax return online:

Register for Self Assessment

Firstly, you’ll need to register for self assessment on the HMRC website by providing some personal information and your National Insurance number to set up your account. HMRC will then send you a 10-digit Unique Taxpayer Reference or UTR number within a few days. Keep this number handy when filing your return.

Calculate Your Tax

Next, gather records of your income and any deductions or credits you’re eligible for. You need to determine how much tax you owe for the tax year. Taxd makes this process even easier through tax calculators. Be sure to double-check that the amount seems accurate based on your income and deductions.

File Your Return

First, you need to create an account by answering a few questions here if you're a new user. Otherwise, you can simply log in to your account if you already have an account.

It will then take you to this page: https://assessment.taxd.co.uk/, where you will get a detailed questionnaire to file your self-assessment tax return. The questionnaire is divided into seven sections.

Note: If you’re a landlord, you will need to fill an additional section called “Rentals (SA100).”

Section 1: Introduction

Input details like your job status and additional income source.

Section 2: Residence (SA109)

In this section, you need to mention the number of days you spent in the UK, workdays in the UK, other countries you've lived in, your nationalities, and your ties to the UK.

Section 3: Employment (SA102)

If you select “Employed” during the tax year, you will fill out this section. Here, you will need your P60, P45, or P11D documents, as well as the details of your expenses (For the year).

Section 4: Rentals (SA100)

Here, you will add details about the property from which you earned money during the tax year.

Section 5: Pension and Benefits

In this section, we will ask you about the income relating to your pension, or state benefit and any taxes deducted from the pension or state benefit.

Section 6: Credits and Deductions

Select if anything from this, applies to you.

Section 7: General

This is almost the last stretch of your tax filing process. We ask you some general questions to make sure if have all the information that is needed.

Section 8: Personal Information

Finally, add personal information such as your birth date and address.

Once you are through all the sections, review the tax calculation and submit the return digitally to HMRC after verifying your identity.

If you want a detailed step-by-step guide, check out this video:

Once you are through all the sections, review the tax calculation and submit the return digitally to HMRC after verifying your identity.

Pay What You Owe

If there’s a balance due for your self-assessment tax, you’ll need to pay it. You can pay via direct bank transfer, debit/credit card, or cheque. HMRC will deduct the payment from your account on the date you specify. You’ll have to pay the interest and penalties if you miss the deadline or underpay.

That covers the basic steps for completing your self-assessment tax return online.

Penalties

If you miss the deadline to register, submit your return, or pay your tax bill, you will face penalties.

• Up to 3 months late: You’ll receive a fixed penalty of £100.
• More than 3 months late: The penalty increases, depending on how late the submission or payment is.

For more details, visit the GOV.UK website to understand the full range of penalties and how they apply.

What are Payments on Account?

Payments on account refer to paying instalments of your tax liability throughout the tax year before your Self-assessment is due. This helps ensure you don’t end up with a large tax bill all at once. If you owe more than £1,000 in tax for the year, you’ll typically make payments on account in two instalments - one in January and one in July. The payments are based on your estimated tax liability for the year.

Filing Non-Resident UK Tax Returns for Expats

If you live abroad but still have UK tax obligations, you’ll need to submit a self-assessment tax return as a non-resident. The process is similar to that of residents, but there are a few key differences to be aware of.

As an expat, you’re required to report your UK income, such as rent, pensions, or interest earned in British bank accounts. You’ll calculate your UK taxes owed based only on your UK income. Any foreign income you earn is not taxable in the UK.

To file a non-resident UK tax return, you must register for a self-assessment online and choose “non-resident” as your status. You’ll report details like your overseas address and any UK income on the tax return form SA1. The deadlines are the same as for residents: register by October 5 and file your return by January 31.

However, as a non-resident, you may owe less in taxes or even no tax at all. The UK has double taxation agreements with many countries that give certain tax benefits to expats. You may be eligible for non-resident tax relief on some types of UK income, like pensions or interest.

You should also check if the Statutory Residence Test applies to you. If you meet certain conditions, showing your main home is now abroad, you’ll be considered non-resident for tax purposes. This can also provide some tax relief and simplify filing UK tax returns online.

Final Words

So there you have it, a complete guide to navigating the self-assessment tax process from start to finish. While the deadlines and paperwork can seem daunting, taking it step by step and staying on top of things will help make the process as painless as possible.

Remember, you've got this under control as long as you register, calculate what you owe, and submit your return on time. The taxman will get his due, but at least you can rest easy knowing your taxes are done for another year.

Sign up at Taxd, a self-assessment software to help you through the process.

FAQs On How to Do a Self-Assessment

1. How to do a self-assessment tax return online?

Log into your HMRC online account and select “File your self assessment tax return” under the self assessment tab. This will take you to the tax return form. Work through the sections, entering details like your personal information, income, benefits, pensions, and expenses. Refer to your records as needed.

2. For whom is a self-assessment tax return required?

A self-assessment tax return is typically required if you are self-employed, a director of a firm, have a sizable income from investments or rental properties, or have several sources of income in addition to your normal job.

3. What information will I need to do a self-assessment?

Have records of your income and any deductible expenses handy. This includes payslips, P60 forms, interest statements, dividend vouchers, business income and expense receipts, etc. You’ll also need your Unique Taxpayer Reference (UTR) number and any activation codes HMRC has sent you.

4. What if I have questions or get stuck?

Don’t worry; HMRC’s helplines and webchat are there to assist you. You can also save your progress and come back to complete the form later. Many questions provided on-screen help text with guidance. You can even take the help of Taxd for a smooth process.