This is one of the questions we are asked most often by clients who are starting a business, so we thought a plain English guide would be helpful!
Every year, more than 660,000 people in the UK start their own business. If you’re one of them, understanding how Self Assessment works is essential for your financial compliance. Self Assessment is the process HMRC uses to collect tax from individuals whose income isn’t automatically taxed through PAYE. Did you know that about 3.5 million sole traders make up roughly 60% of the UK’s 6 million businesses? Most of these business owners need to complete Self Assessment tax returns.
You’ll need to complete a Self Assessment tax return if:
- Your self employed income exceeds £1,000
- You are a company director
- You earned £150,000 or more (for 2023/24 PAYE-only taxpayers; for 2024/25 onwards, this threshold is removed for PAYE-only taxpayers, but you may still need to file if you have other untaxed income or meet other criteria)
The process comes with strict deadlines that you must follow to avoid penalties. For the 2024/25 tax year, you must:
- Register by 5 October 2025
- Submit paper returns by 31 October 2025
- Complete online submissions by 31 January 2026
Missing these deadlines results in an immediate £100 penalty, with further charges accumulating over time.
Late payment penalties
For tax years up to 2024–25, the penalties are:
- 30 days late: 5% of the unpaid tax
- 6 months late: An additional 5% of the unpaid tax
- 12 months late: Another 5% of the unpaid tax
Interest is also charged from the due date until the tax is paid.
Our guide explains everything you need to know about Self Assessment, from determining whether you need to file, to registering with HMRC, preparing your documents, and submitting your return correctly and on time.
Need tailored advice?
At Smart Accountants Sussex and Surrey, we help individuals and business owners navigate all aspects of Self Assessment – from determining whether you need to file, to guiding you through the registration process, and ensuring your return is accurate and compliant. We take the guesswork out of HMRC requirements so you can stay focused on your business. Do contact us for any advice of help via our contact page or call our Sussex office: 01903 201940 or either of our Surrey offices: 01737 847779
Who must file a Self Assessment tax return?
Understanding whether you need to file a Self Assessment tax return is essential when managing your tax affairs. HMRC requires various individuals and businesses to submit returns each year, and knowing if you fall into one of these categories is the first step in managing your tax obligations properly.
Self employed, landlords, and other cases:
Several groups of taxpayers must complete Self Assessment. If you’re self employed with income exceeding £1,000 (before expenses) in the tax year, you must register and file. This applies regardless of whether this is your main income or a side business.
For business partnerships, all partners need to complete a return regardless of profit levels. This ensures HMRC has visibility of all partnership income.
Landlords have their own specific requirements. You will need to file if your property income exceeds £2,500 after allowable expenses or £10,000 before expenses. If your rental income falls between £1,000 and £2,500, you should contact HMRC directly for guidance.
Other individuals who must submit returns include:
- Company directors (except those of non-profit organisations)
- Ministers of religion of any faith
- Those receiving income from trusts or estates with further tax due
Income thresholds and special situations
Beyond these occupation-based criteria, several income thresholds will trigger Self Assessment requirements. Those with a total taxable income of £150,000 or more, before tax, must file a return for 2023/24 if they are PAYE-only taxpayers. For 2024/25 onwards, this threshold is removed for PAYE-only taxpayers, but you may still need to file if you have other untaxed income or meet other criteria.
You must also complete a Self Assessment if you have:
- Savings income of £10,000 or more (excluding ISAs)
- Dividend income exceeding £10,000 (excluding ISAs)
- Untaxed income of £2,500 or more from any source
Self Assessment is mandatory if you need to pay the High Income Child Benefit Charge, have Capital Gains Tax to pay, or want to claim tax relief on employment expenses exceeding £2,500 annually.
Additional situations requiring Self Assessment include:
- Receiving foreign income (unless it’s only dividend income below the allowance)
- Being a non-UK resident with UK taxable income
- Seeking relief under double tax agreements
Finally, if HMRC has already sent you a notice to file a return, you must submit one regardless of your circumstances. This is a legal requirement that cannot be ignored.
What to prepare before you start filing
Preparing properly for your Self Assessment tax return saves time and helps you avoid errors. Let’s break down exactly what you need to have ready before you start the filing process.
How to do a tax return for self employed
When you’re self employed, keeping accurate financial records throughout the tax year (6 April to 5 April) is essential. This is something we advise all our clients to do right from the start of their business journey.
For self employed individuals with turnover below £90,000, you can simply enter your total expenses as one figure when completing your return. If your turnover exceeds this threshold, you’ll need to itemise your expenses across specific categories. The main form you’ll need is the SA100, plus the self employed supplement form SA103
Income sources you must report
Your Self Assessment must include all your untaxed income. This means you need to report:
- Earnings from self employment
- Dividends
- Interest from savings
- Rental property income
- Foreign income
- Pension payments
- Capital gains
If you received benefits from an employer, these must be declared using information from your P11D form. Gathering complete records of all income sources before starting your return will make the process much smoother.
Allowable expenses and deductions
One of the key benefits of being self employed is the ability to claim allowable expenses. These reduce your taxable profit significantly. For instance, if your turnover is £40,000 and you claim £10,000 in allowable expenses, you’ll only pay tax on £30,000.
Unsure what you can claim?
We know that working out allowable expenses can be tricky, and claiming everything you’re entitled to could save you thousands. Our team at Smart Accountants Sussex and Surrey will review your business expenses in detail to make sure you’re claiming everything legally allowed, while avoiding costly mistakes.
Permissible expenses include:
- Office costs
- Travel expenses
- Business insurance
- Marketing
- Professional fees
- Training courses
- Certain home working costs
Remember that personal purchases cannot be claimed as business expenses. If you work from home (as many of our clients do), you can claim a proportion of household expenses based on the number of rooms used or time spent working.
What documents you’ll need
Before starting your return, we recommend gathering these essential documents:
- Your 10-digit Unique Taxpayer Reference (UTR) and 12-digit Government Gateway ID
- National Insurance number (found on tax letters, payslips or P60s)
- P60 and P45 forms (if previously employed)
- Bank statements and interest certificates
- Complete records of all business income (invoices and receipts)
- Detailed expense receipts organised by category
- Details of pension contributions and charitable donations
Organising these documents throughout the year rather than scrambling at the deadline makes the filing process considerably more manageable. We often find that clients who maintain organised records find the Self Assessment process much less stressful!
Filing, paying, and fixing mistakes
Once you’ve gathered all your financial information, what’s the next step? It’s time to tackle the actual tax return process. Filing correctly, paying on time, and knowing how to fix any mistakes are crucial steps in understanding how Self Assessment works.
How to complete Self Assessment online
To file online, you’ll need to sign in to your HMRC account using your Government Gateway ID and UTR number. After signing in, you can complete your tax return section by section, saving your progress as you go (which is particularly helpful if you need to find additional information or take a break). You must submit your online return by midnight on 31 January following the tax year. One of the advantages of the online system is that it calculates your tax liability automatically based on the information you provide.
How to pay your tax bill and payment options
After filing, you’ll receive your tax calculation showing how much you owe. HMRC offers several payment options to suit different preferences:
- Online banking and Faster Payments (same or next working day)
- Direct Debit (3-5 working days depending on whether it’s a new setup)
- CHAPS transfer (same day)
- Debit or corporate credit card (same or next working day)
- Bank or building society (same day)
- Cheque through post (within 3 working days)
Remember, the deadline for paying your Self Assessment tax bill is 31 January for the previous tax year. We always advise our clients to make payments a few days before the deadline to avoid any last-minute technical issues.
What if you miss the Self Assessment tax deadline?
Missing the deadline triggers an automatic £100 penalty, even if you owe no tax. After three months, additional daily penalties of £10 accrue, up to £900. At six and twelve months, further penalties of 5% of tax due or £300 (whichever is greater) apply.
Late payment also incurs interest charges plus a 2% penalty if not paid within 16 days after the deadline, a further 2% after 31 days, and additional 5% surcharges at 6 months and 12 months.
The penalty system is designed to encourage timely submissions, and we find that many clients are surprised by how quickly these charges can add up!
How to amend a submitted return
Have you discovered a mistake on your submitted return? Don’t panic! You can amend your tax return within 12 months of the filing deadline. For the 2023-24 tax year, corrections must be made by 31 January 2026.
If you filed online, you’ll need to wait 72 hours after submission before making changes through your HMRC account. For paper returns, submit a new one clearly marked “amendment”. Your tax bill will be recalculated based on your corrections, potentially resulting in additional tax due or a refund.
We often remind our clients that it’s better to submit an amendment than to worry about a mistake – HMRC appreciates honesty and promptness in correcting errors.
Conclusion
Self Assessment might seem overwhelming at first, especially if you’re new to running your own business. We know that many of our clients initially find the process daunting but, with proper understanding and preparation, it becomes much more manageable.
Throughout this guide, we’ve covered who needs to file, how to register with HMRC, what documents to prepare, and the various methods for submission and payment. Breaking down the process into these smaller steps makes it much easier to approach.
Your best defence against tax-related stress is good preparation. Keeping thorough records throughout the year rather than scrambling before deadlines will save you significant time and help you avoid those unwelcome penalties.
Meeting the key deadlines – 5 October for registration and 31 January for online submissions ensures you won’t face the automatic £100 penalty and the escalating charges that follow.
HMRC does provide tools and resources to help you complete your return accurately. If you do make a mistake, remember you have 12 months after the filing deadline to submit corrections. Staying organised with your tax obligations allows you to focus more on growing your business and less on administrative concerns.
Self Assessment certainly requires attention to detail but, with a methodical approach, it becomes a straightforward part of your business routine. Many of our clients find that once they’ve completed their first tax return, subsequent years become much easier.
If you need help with your Self Assessment tax return or have questions about your tax obligations, please don’t hesitate to contact us. We’re here to make the process as smooth as possible for you. Whether you’re filing for the first time or you’ve been self employed for years, Smart Accountants Sussex and Surrey can handle your Self Assessment from start to finish – giving you peace of mind that everything is filed accurately on time, and in line with HMRC regulations.
Looking ahead: Changes coming with Making Tax Digital (MTD)
It’s also important to be aware that big changes are on the horizon for Self Assessment under the government’s Making Tax Digital (MTD) programme. From April 2026, self employed individuals and landlords with annual business or property income over £50,000 will be required to comply with MTD for Income Tax. This means you will need to use MTD-compatible software to keep digital records and submit quarterly updates to HMRC, replacing the traditional once-a-year tax return.
In April 2027, this threshold will extend to include those earning over £30,000 annually. While this may feel like a long way off, preparing early can help you avoid disruption. At Smart Accountants Sussex and Surrey, we recommend that clients start familiarising themselves now with digital record-keeping tools and MTD software. By getting ahead of the curve, you can ensure a smooth transition and avoid last-minute stress when these new requirements come into force. If you’re unsure whether MTD will apply to you, or you’d like advice on choosing the right software, our team is here to help.
Frequently asked questions about Self Assessment
When is the deadline for submitting a Self Assessment tax return for the 2024-25 tax year?
For the 2024-25 tax year, the deadline for paper returns is 31 October 2025, while online submissions must be completed by 31 January 2026.
Who needs to file a Self Assessment tax return?
You need to file a Self Assessment if you’re self employed with income over £1,000, a company director, have property income exceeding certain limits, or if your total taxable income is £150,000 or more for 2023/24 PAYE-only taxpayers (this threshold is removed for 2024/25 onwards, but you may still need to file if you have other untaxed income or meet other criteria).
How do I register for Self Assessment with HMRC?
To register, visit the HMRC website and sign up for Self Assessment by 5 October 2025, following the tax year you need to report for. You’ll receive a Unique Taxpayer Reference (UTR) and activation code to set up your account.
What documents do I need to prepare for filing my Self Assessment?
You’ll need your UTR, National Insurance number, P60 and P45 forms (if applicable), bank statements, business income records, expense receipts, and details of any pension contributions or charitable donations.
What happens if I miss the Self Assessment deadline?
Missing the deadline results in an immediate £100 penalty, even if you owe no tax. Additional penalties and interest charges apply for continued delays, including daily fines after three months and percentage-based surcharges at later stages. For late payment, a 2% penalty applies if not paid within 16 days after the deadline, a further 2% after 31 days, and additional 5% surcharges at 6 months and 12 months.
How is income tax calculated through Self Assessment?
Income tax through Self Assessment is calculated based on your total taxable income for the year, including earnings from self employment, rental income, dividends, and savings interest. HMRC applies the relevant tax rates and allowances to your declared income to work out how much income tax you owe. At Smart Accountants Sussex and Surrey, we help ensure all your income sources are correctly reported and all eligible deductions and allowances are claimed – so you never pay more tax than necessary.
What are the benefits of filing online tax returns?
Filing your Self Assessment as an online tax return offers several advantages: it gives you an extra three months to submit compared to paper returns, provides instant confirmation of submission, and automatically calculates your tax bill based on the information you enter. Online returns also make it easier to amend mistakes if needed. If you’re not confident filing online yourself, Smart Accountants Sussex and Surrey can manage your online tax return for you, ensuring everything is accurate and submitted on time.
How do I pay my Self Assessment tax bill?
Once you’ve filed your return, you can pay your tax bill using online banking, Direct Debit, debit or credit card, bank transfer, at your bank or building society, or by cheque. Just make sure your payment reaches HMRC no later than 31 January to avoid late payment penalties. We always recommend paying a few days early to steer clear of any last-minute issues.
What if I make a mistake on my tax return?
Mistakes happen – but don’t worry. You can amend your Self Assessment tax return within 12 months of the original filing deadline. If you filed online, simply log into your HMRC account and make the correction (you’ll need to wait 72 hours after your initial submission). For paper returns, submit a new amended form clearly marked as an amendment.
Where can I get help with my Self Assessment?
HMRC offers a range of online guides and helplines, but if you’d prefer personal advice, working with an experienced accountant can save you time and worry. At Smart Accountants Sussex and Surrey, we’re always here to help you understand your tax obligations, file your return accurately, and answer any questions along the way. Feel free to get in touch through our contact page or call us directly at our Sussex office on 01903 201940 or one of our Surrey offices on 01737 847779.
