Self Assessment tax returns for the self employed

Chris Andreou

May 18, 2021

self assessment for self employed guide

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Tax

What is a Self Assessment?

If you're self-employed—either as a business owner or freelancer—you will need to complete a Self Assessment tax return. 

It's one of the most important tax documents you will need to handle, as there are numerous details you'll have to keep in mind, including deadlines and late penalties. 

Our guide offers a quick overview of the essentials—so it's just the article you need if you're getting started.  

A Self Assessment (or Self Assessment tax return) is a form that business owners are required to submit to HMRC every year. It details how much you've earned and your sources of income, which enables HMRC to work out the Income Tax and National Insurance you need to pay. 

This applies to self-employed workers, who—unlike employees—don't have their income tax automatically deducted from their salaries. 

Who needs to file a Self Assessment?

Individuals need to file a Self Assessment if they've received income that isn't taxed at source.

This is generally the case if you are:

  • A sole trader. You'll need to complete a Self Assessment, as National Insurance contributions or Income Tax deductions haven't been made on the income you receive from running your business. 
  • A limited company director: Limited company directors are required to file a Self Assessment, as they receive additional income not taxed at source—such as dividends. 
  • An LLP member: LLP members are required to submit a Self Assessment, as each member pays taxes on his or her share of the profits. 

Tip: Use the Gov.uk online tool to find out if you're required to submit a Self Assessment.  

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How to register for your Self Employed Self Assessment

You can register for Self Assessment on the Gov.uk registration page.

HMRC will then send out a letter with your 10-digit Unique Taxpayer Reference (UTR), as well as set up your account for the Self Assessment online service.

If you've submitted a paper return or registered by phone previously, you would have already had a UTR number. In this case, you'll only need to create an account for the online service. 

The registration process differs slightly if you're setting up as a limited company or limited liability partnership. You'll need to access a different registration page.

When to register for your Self Assessment

You will need to register by 5th October after the end of the relevant tax year.

Here's an example: for the tax year starting 6th April 2021 to 5th April 2022, the registration deadline will fall on 5th October 2022. 

What are the Self Assessment deadlines?

Online returns must be filed by 31st January, while paper returns are due earlier and must be filed by 31st October.

Whichever way you choose to file your return, payments for your tax bill are due on 31st January after the end of the relevant tax year. For example, your tax bill for the 2020/21 financial year must be paid up by 31st January 2022. 

Whenever possible, we recommend filing your Self Assessment early.

There are many benefits to doing so: this leaves you with ample time to budget for any tax you owe, and helps you avoid HMRC's late penalties. Plus, the HMRC call centres get particularly busy during January, so you may have to put up with extended wait times if you require help with your filing. 

If you're a sole trader, you can file your Self Assessment as soon as the tax year ends. If you're running a limited company, you'll need to issue yourself the P60, or have your accountant prepare this for you before you file your Self Assessment.

Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax will be officially rolled out in April 2023 for self-employed individuals and landlords with an annual income exceeding £10,000.

For the time being, you have the option of signing up for a live pilot. Instead of filing a Self Assessment tax return, you'll keep digital records and provide updates to HMRC to test and develop the MTD for Income Tax service.

Self Employed Registration Guide

What's Inside:

  • What is a Sole Trader?
  • Sole trader advantages
  • Sole trader disadvantages
  • How to register self employed
  • Sole trader responsibilities
  • Self employed tax
  • Important self employed deadlines
Thank you! Your submission has been received!
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Self Employed Registration Guide

What's Inside:

  • What is a Sole Trader?
  • Sole trader advantages
  • Sole trader disadvantages
  • How to register self employed
  • Sole trader responsibilities
  • Self employed tax
  • Important self employed deadlines

Self Assessment Late Filing & Payment Deadlines

HMRC's penalties for late filing:

  • You will be charged a penalty of £100 if you fail to file on time 
  • A daily penalty of £10 will be charged, up to a maximum of £900 if you haven't filed by 30th April
  • A penalty of £300 (or 5% of the tax you owe, if this is greater) will be charged if you haven't filed within a year
  • An additional penalty of up to 100% of owed tax may be charged under certain circumstances, such as if HMRC determines that you've been deliberately avoiding paying tax

Penalties are also charged for late payments:

  • If you are 30 days late, a penalty of 5% of the tax due will be charged
  • If you are six months late, a penalty of 5% of the outstanding tax at that date will be charged
  • If you are 12 months late, a penalty of 5% of the outstanding tax at that date will be charged

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How to register self employed with HMRC Guide

How to register self employed with HMRC

From starting your side business to going freelance full-time, becoming self-employed can feel scary and exciting all at once.

Before you jump right in, you need to ensure that you're staying on the right side of the law- and this begins with registering as self-employed with HMRC.

In doing so, you can be sure that you're paying the right amount of income tax and National Insurance Contributions, and thereby avoid paying unnecessary financial penalties.

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How to pay your Self Assessment Tax Guide

How to pay your Self Assessment Tax

You may already be familiar with the process of paying your Self Assessment tax bill.

Yet, it's always helpful to have a guide on hand-one that you can look over just before you make your payment, so you can be sure that you haven't missed out on important details that can put you at risk of incurring a penalty.

  • Submission of Self Assessment tax return: You need to submit your online tax returns by 31st January. Paper returns are due earlier; these must be filed by 31st October.
  • Payment: Any personal tax due for the previous tax year (6th April-5th April) must be paid up by 31st January. This means that your 2019/20 tax year must be paid up by 31st January 2021.
  • Payments on Account: "Payments on account" are advance payments for your tax bill that are spread out across the year. You'll need to make two payments each year, and these are due on 31st July and 31st January.

Tip: If the payment deadline falls on a public holiday, make sure that your payment is submitted by the final working day.

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How do I pay my self assessment? Guide

How do I pay my self assessment?

There are various ways to pay your Self Assessment Tax bill.

Same or next day

You need a paying-in slip from HMRC to pay at a bank or building society.

3 working days

5 working days

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How do I register as a Sole Trader? Guide

How do I register as a Sole Trader?

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What is a sole trader? Guide

What is a sole trader?

If you're planning to start out on your own, one of the most important decisions you'll need to make is figuring out how you should structure your business.

As a freelancer, contractor or small business owner, there are three main types of legal structures you should consider:

  • Sole proprietorship
  • Limited company
  • Working through an umbrella company

It's a decision that requires careful consideration, and it's important that you seek advice from qualified professionals when you weigh out the pros and cons of each business structure. To begin with, you need to have a good grasp of the basics-and here's where our guide comes into the picture.

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Self employed tax obligations guide Guide

Self employed tax obligations guide

When you're self-employed, you have unique financial obligations-especially when it comes to paying your taxes.

When you work for a larger corporation, or even a relatively small business, your company takes on a large percentage of handling your tax responsibilities for you.

As a freelancer or small business owner, you're on your own. You work as an independent contractor for each of the clients you work for-and they don't take taxes out of your check before they send it to you.

How then should you handle the responsibility of paying your taxes?

This guide will help you get started:

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Self Employed Registration Guide Guide

Self Employed Registration Guide

  • What is a Sole Trader?
  • Sole trader advantages
  • Sole trader disadvantages
  • How to register self employed
  • Sole trader responsibilities
  • Self employed tax
  • Important self employed deadlines
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When do I need to pay my self assessment tax bill? Guide

When do I need to pay my self assessment tax bill?

Payments for your Self Assessment tax bill are due on:

  • 31st January: You'll need to pay tax that you owe for the previous tax year, as well as your first payment on account. For the 2020/21 tax year, the first payment on account is due by 31 January 2021, while the balancing payment is due on 31 January 2022.
  • 31st July (following the end of the tax year): You'll need to pay your second payment on account. For the 2020/21 tax year, the second payment on account will be due on 31 July 2021.
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7 Advantages of Being a Sole Trader Guide

7 Advantages of Being a Sole Trader

7 Advantages of Being a Sole Trader

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What are Payments on account? Guide

What are Payments on account?

Payments on account are advance payments for your tax bill that are spread out across the year. You'll need to make two payments each year, and these are due on 31st January and 31st July.

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What are Self Assessment payments on account? Guide

What are Self Assessment payments on account?

Paying your taxes can seem complicated, particularly if you're newly self-employed. There are numerous elements you need to understand and stay on top of, and one of these is the payment on account.

To help you get a grasp on the essentials, we've written up a quick guide below. It'll cover what a payment on account is, how it works, late payment penalties and other key information you need to know.

Payments on account are advance payments for your tax bill that are spread out across the year. You'll need to make two payments each year, and these are due on 31st January and 31st July.

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What are Self Assessment Tax Returns? Guide

What are Self Assessment Tax Returns?

A Self Assessment (or Self Assessment tax return) is a form that business owners are required to submit to HMRC every year. It details how much you've earned and your sources of income, which enables HMRC to work out the Income Tax and National Insurance you need to pay.

Read Full GuideRead Full GuideCalculate Now

Download Now:

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Oops! Something went wrong while submitting the form.
Self Assessment tax returns for the self employed Guide

Self Assessment tax returns for the self employed

If you're self-employed-either as a business owner or freelancer-you will need to complete a Self Assessment tax return.

It's one of the most important tax documents you will need to handle, and there are numerous details you'll have to keep in mind, including deadlines and late penalties.

Our guide offers a quick overview of the essentials-so it's just the article you need if you're getting started.

A Self Assessment (or Self Assessment tax return) is a form that business owners are required to submit to HMRC every year. It details how much you've earned and your sources of income, which enables HMRC to work out the Income Tax and National Insurance you need to pay.

This applies to self-employed workers, who-unlike employees-don't have their income tax automatically deducted from their salaries.

-

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What is a Sole Trader: Meaning & Definition Guide

What is a Sole Trader: Meaning & Definition

7 Characteristics For Defining Sole Traders

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What is a Self Assessment tax form SA100? Guide

What is a Self Assessment tax form SA100?

The SA100 is the main document you need to fill when completing your Self Assessment tax return. There are two ways to complete your Self Assessment tax return: you can make an online submission, or download the form SA100 and make a paper submission.

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When is the next self assessment deadline? Guide

When is the next self assessment deadline?

The deadline for filing Self Assessment is 31 January following the tax year end. For example, the deadline for the 2020/2021 tax year is 31 January 2022.

Payments for your tax bill are due on 31st January after the end of the relevant tax year. If you're making payments on account, there are two payments due each year on 31st January and 31st July.

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