Filing your self assessment tax return can be a tricky process if you’re not sure what you need to do. Especially when HMRC like to throw in complicated words too! So take a read below as I walk you through what a tax return is, what the deadlines are and how to pay.
Let’s take a look at what actually is a self-assessment tax return and who needs to complete one.
A self assessment tax return is a way for you to pay any income tax owed to HMRC. This is any tax due for the previous tax year that hasn’t already been paid through PAYE. Let’s break that down further. If the only income you have is through employment (i.e. a PAYE scheme), then usually you do not need to complete a tax return. But if you have earnings from other places, such as running your own sole trader business, HMRC needs a way to collect the tax from those earnings.
Each tax year runs from April 6th to April 5th of the following year. At the end of the tax year, you complete a self assessment. Then you will need to pay your tax bill to HMRC by the 31 January deadline. If you don’t complete a return, HMRC has no way to know how much money you owe. But they have plenty of ways to find out how much money you’ve made!
More people than you might think need to file a tax return. If any of the below apply to you, then you might need to send a tax return:
One big misconception that people have is that you’re going to be taxed on every single thing you’ve earned. Fortunately, this is not true! There are lots of allowances that you can take advantage of. For example, most people will have the standard personal allowance which means the first £12,570 that you earn is not taxed. There are also additional allowances such as the first £500 of dividend income not being taxed.
Another misconception is thinking that you only fill it in once and that’s it. Err no! It’s an annual tax return. You need to file your tax return each year. HMRC usually send out a notice to file a return at some point after April 6th. If you get yours submitted fast enough, then you can sometimes beat this notification. Like I did last year when they sent me a reminder to file my return, 6 weeks after I had already done it! If you don’t need to send in a return anymore, then you need to tell HMRC asap. Otherwise, they will just keep hounding you and adding fines to your account.
The last thing you want is to miss a deadline and end up with a fine on top of the tax you need to pay! So write these dates down. Or better yet, put a repeating notification in your phone for every year so you don’t forget.
The first deadline is January 31st. By this date you need to have submitted your tax return to HMRC. You also need to have paid any tax you owe by this same date. Your first payment on account is also due at the same time.
The next date you need to know is July 31st. This is when your second payment on account is due. We’ll take a closer look at what these are further down.
The final two dates to be aware of are April 5th and 6th. April 5th is the end of the tax year. It’s the date your accounts need to be made up to (although HMRC will let you use any date 5 days either side of this – so March 31st year-enders, you’re fine!). You can file your return from April 6th onwards. So you don’t need to wait until January 31st to do it. In fact I’d actively encourage you to get it in early so it’s done and out the way!
If you miss the deadline to file your return by January 31st, you will get a late filing penalty. This starts with a £100 penalty. Then, after 3 months, you get daily penalties of £10 per day up to a maximum of £900. If you’ve still not filed it after 6 months, you get another penalty of either 5% of the tax due or £300, whichever is greater. If a whole 12 months go by without you filing it, that’s another 5% or £300 charge, whichever is greater.
If you pay your tax late, you get penalties of 5% of the tax owed at 30 days, 6 months and 12 months. You also have to pay interest, currently set at 8% on the amount owed.
So as I’ve already said, put a notification in your phone or somewhere you will see it, to make sure you don’t miss them!
You need to register for self assessment by October 5th. This is the deadline for you to tell HMRC that you need to fill in your first tax return for the previous tax year. You only need to do this if you’ve not sent a self assessment return before. You can register online by signing into (or creating a login for) your business tax account and selecting “Add a tax to your account to get online access to a tax, duty or scheme”.
You’ll get sent a Unique Taxpayer Reference (UTR) in the post within 15 working days (in theory!). This will allow you to complete your online self assessment. I say “in theory” because we all know what HMRC and the post are like! So the earlier you can register, the better.
Paying your tax bill has several parts to it. It usually isn’t just one payment and you’re done (though it definitely can be!). Let’s find out what you need to know to pay tax.
After you’ve submitted your self assessment you should be greeted with a screen that tells you what this year’s tax bill will be. Now this is where it can get a bit complicated. Let’s pretend you’re submitting your very first return and HMRC say you have £4000 of tax to pay. You need to pay this by January 31st.
What they may also say is that you need to make a payment on account. This is their way of “helping” you to spread the cost of your tax. They estimate that you’ll earn the same amount next year so they want you to now pay half of the amount of tax you’ll owe; £2000. This means by January 31st you’ll need to pay £6000 (£4000 + £2000).
Then, they want the other half of your estimated tax, another £2000, by July 31st. This is your second payment on account. So you have now paid £4000 for your first tax return and a further £4000 towards your next tax bill.
Come the following year, when you fill in your tax return again, one of two things will happen. If you have earned less than the previous year and you owed less tax than the £4000 you’ve already paid, you can apply for a refund. If you have earned more than the previous year and you owe more tax than the £4000 you’ve already paid, you’ll need to make a balancing payment for the difference.
As I mentioned earlier, you can apply to reduce your payments on account however I very rarely recommend it. If you reduce them and then you end up owing more tax than you’ve paid, HMRC can charge you interest for the money you didn’t pay them.
There are several ways you can pay your upcoming tax bill. The most common ones are:
Unfortunately, if you bury your head in the ground about your tax then you’ll end up with a nasty shock come January 31st! The best way to get prepared is to start setting money aside for it asap. Start putting roughly 20-30% of your profit into a separate account or “pot” every month. If you can do that, the majority, if not all, of your tax should be covered come January.
As I said earlier, submit your self assessment form as soon as you can after April 5th. That way you can calculate your tax liability and still have potentially over 9 months to save up the money to pay for it. You don’t have to wait till January to pay it either. You can pay off any amount you want to leading up to January 31st. So if you get a bit of extra money one month, you could look at paying off a portion of your bill early.
Ahh Making Tax Digital for Income Tax Self Assessment. Or as its much simpler name MTD for ITSA. Yes, I know it’s not actually simpler. No, I didn’t come up with the name. Yes, I would have chosen a different one if it was me deciding.
You might not have heard anything about this. In fact, outside of the many webinars I have attended as a bookkeeper, I haven’t heard anything about it. Which, as a small business owner, is slightly worrying! Basically, if you earn over a certain amount, then you will have to keep digital records and send updates to HMRC every quarter.
If you earn over £50,000, you will need to do this from April 2026. If you earn over £30,000, you can wait till April 2027. And if you earn over £20,000 your time is coming in April 2028.
You will need to start using software for your bookkeeping. I’d recommend Xero or FreeAgent personally. All your sales and purchases are kept on that software. Then, every quarter you’ll send an update to HMRC which shows the totals of your sales and expenses. You’ll then be told how much tax they estimate you will owe at the end of the year.
After you have submitted your fourth quarterly update, you’ll make any final adjustments to your figures. Then you need to send your tax return which will include any other income you’ve had such as bank interest etc. It sounds like a lot of extra work, and it is, but it will also help you.
Every quarter you will send a summary to HMRC of your sales and expenses. This means that every 3 months you will know exactly what profit your business has made. That will be a big improvement for a lot of people. You can use that information to make better decisions for your business.
After you’ve submitted your quarterly updates, you’ll get an estimate of how much tax and national insurance you’ll owe. This means every 3 months you’ll know how much money you need to put aside. That gives you a lot of extra time to start saving!
Yes you absolutely can. With caveats.
You have 12 months from the end of the tax year in question to amend your return. For example, for the tax year 2025 to 2026, your return is due by January 31st 2027. You will have until January 31st 2028, to amend your online tax return. This should give you more than enough time to fix any mistakes that you spot.
If you do need to make changes to an earlier tax year, you still can. You will just need to write to HMRC instead.
After you’ve finished filling in your self assessment online, you need to wait 3 days before you can amend it. So even if you spot a mistake straight away, sit down, have a cup of tea and relax. There is nothing you can do about it for the next 72 hours.
Once that time has passed, log into your Government Gateway account and find your self assessment. Select “tax return options” from the menu and choose the tax year you need to amend. Fix the errors and resubmit it. If you used software like Xero to submit your return, you’ll need to edit it via there.
Once you’ve fixed the errors, HMRC will calculate the tax that you now need to pay. If the new bill is lower, you may be able to receive a tax refund if you’ve paid too much. If the new bill is higher, HMRC will tell you the deadline for when you need to pay. They’ll also say if it changes the amount of your payments on account.
Ell Evan Bookkeeping are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice.
