The short answer
Self Assessment is how HMRC collects tax on income that is not taxed automatically through an employer's payroll. Most employees never need to file. You do if HMRC has not had the chance to tax some of your income, or if you owe a charge that is collected through the return.
The tax year runs from 6 April to 5 April. The test is applied to that year, not the calendar year. If you were self-employed at any point during it, you need to check whether the rules below apply.
The main reasons you must file
According to GOV.UK, you must send a return if, in the tax year, any of these applied:
- You were self-employed as a sole trader and earned more than £1,000 (before deducting expenses).
- You were a partner in a business partnership.
- You had to pay Capital Gains Tax on assets you disposed of.
- You had to pay the High Income Child Benefit Charge and were not paying it through PAYE.
- You are an off-payroll worker repaying a student or postgraduate loan.
Other income that can trigger a return
Separately from the tests above, a return is usually needed where you have income that has not been taxed at source. GOV.UK lists:
- Rental income from property or land
- Tips and commission
- Savings interest, dividends and investment income, where they exceed your allowances
- Foreign income
- Any taxable UK income if you are not a UK resident
- Claims for certain reliefs, such as Community Investment Tax Relief and venture capital scheme reliefs
Company directors and dividends
Being a director does not by itself mean you must file. What matters is whether you have untaxed income. If your dividends exceed both your unused Personal Allowance and your £500 dividend allowance, GOV.UK says you need to report them to HMRC. For most directors taking regular dividends, that means a return.
When filing is optional
You can also choose to file, for example to prove self-employment for a mortgage, pay voluntary National Insurance contributions or claim relief on maintenance payments. If HMRC has sent you a notice to file, you must file even if you think you owe nothing.
If you do need to file
If this is your first return, you must register with HMRC first. See how to register, the deadlines and the penalties for getting it wrong.
Need a hand with your return?
We prepare and file Self Assessment returns for directors, sole traders and landlords, and tell you exactly what is due and when before anything is submitted. Call 0114 327 1480.