A guidance for self-employed people on how to complete a Self Assessment tax return.

Author: Arslan Ali

What is a self-assessment?

The procedure of filing a tax return for self-employed people is known as self-assessment.

Unlike workers, who are taxed immediately through the PAYE system, self-employed people must calculate their income and expenses and pay their bills in January.

If you aren't self-employed, you may be required to file a Self Assessment return. If you make money by renting out a home, for example, see our guide on Self Assessment for Landlords.

If you have a large income from savings, investments, or dividends, you'll also need to file a tax return - learn more about dividend tax.

Tax returns for sole traders vs. limited companies

Because your firm isn't a separate legal organisation, sole traders and those in a general business partnership must declare their business revenues and authorised expenses on their Self Assessment.

Because your business is separate and taxed through a Company Tax Return, it's a little different for self-employed people who manage a limited company or operate as a limited liability partnership. However, you will almost always be required to file a personal tax return, which will include your salary and any dividends earned through the company.

Is it necessary for me to submit a Self Assessment tax return?

If you were: in the previous tax year, you must send a tax return and pay your bill through Self Assessment, according to HMRC.

  • a lone trader who earns more than £1,000 every month

  • a business partnership's

If you own and operate your own firm and are solely responsible for its success or failure, you are considered self-employed.

You may also be required to file a return if you have untaxed income from the following sources, according to HMRC:

  • renting out a house (read more about Self Assessment for landlords)

  • commissions and tips

  • dividends, savings, and investments

  • foreign earnings

You can use HMRC's tool to see if you need to complete a sole trader tax return.

Step-by-step instructions for filing a self-employed tax return

Have you considered the preceding requirements and determined that you must file a tax return? Follow the instructions outlined below.

Self-Assessment Registration

By the 5th of October in your business's second tax year, you must have registered for Self Assessment with HMRC. If you don't register by the deadline, HMRC may levy a penalty.

To apply for Self Assessment, go to the gov.UK registration page and fill out the form.

If you're a business partner, you'll need to register here because the process is significantly different.

When you register for Self Assessment, you should receive a Government Gateway user ID, which you can use to create your own tax account. You may manage several aspects of your taxes online once you log in.

Once you've enrolled for Self Assessment, you can file your tax return either online or on paper, however, Hmrc plans to phase out paper tax returns as part of the Making Tax Digital initiative.