How to Complete Your Self-Assessment Tax Return

As a freelancer, self-employed individual, or someone with multiple sources of income, submitting an annual self-assessment tax return with HMRC is often a requirement. Whether you're a seasoned filer or a first-timer, understanding the process can help you navigate the complexities and avoid common pitfalls. If you're an employee paying tax via PAYE, you might think you’re exempt, but there are scenarios where you may still need to submit a tax return.

At Affotax, we’ve put together a helpful guide to assist you in completing your self-assessment tax return efficiently. With these tips, you’ll be well-equipped to stay compliant and optimize your tax situation.

What is a Self-Assessment Tax Return?

Self-assessment is the process through which you report to HMRC how much income you've earned during the tax year and any other relevant financial information. Based on this information, HMRC calculates how much tax and National Insurance (NI) you owe. The process is primarily completed online through HMRC’s portal.

Even though it's called "self-assessment," you don’t have to complete it alone. Many people opt to hire an accountant to ensure the return is filed correctly and to potentially reduce their tax liabilities.

Who Needs to Submit a Self-Assessment Tax Return?

If you earn income that isn't taxed at source through PAYE (Pay As You Earn), or if you have multiple income streams, you’ll most likely need to submit a self-assessment tax return. Here are some common examples of individuals who must file a self-assessment tax return:

• Self-employed individuals or freelancers
• People with multiple jobs or sources of income
• Directors and partners of limited companies
• Individuals earning income from investments or property
• Pensioners working and earning income
• Ministers of religion
• Individuals earning above a certain threshold while claiming child benefits
• Those receiving a P800 form from HMRC indicating they haven’t paid enough tax

If you're uncertain whether you need to submit a self-assessment return, it’s best to check with HMRC directly.

Important Deadlines for Self-Assessment Tax Returns

To avoid penalties and late fees, it’s crucial to meet submission deadlines:

• Online submission deadline: 31 January (this is also the date when your tax payment is due)
• Paper submission deadline: 31 October

Filing early is highly recommended to ensure you have ample time to prepare, check for errors, and manage your finances before the payment deadline.

Payment of Tax

If you have a consistent income, you may be eligible for “payment on account,” allowing you to pay your tax bill in two installments—on 31 January and 31 July. However, if your tax bill is higher than expected, you must pay a "balancing payment" by the following 31 January.

In some cases, if you've overpaid, you may be eligible for a refund, including interest. For individuals who’ve already paid 80% or more of their tax or if the total tax due is under £1,000, payment on account may not apply.

Late Payments: What Happens if You Miss the Deadline?

If you miss the tax payment deadline, HMRC may charge interest and a fine. The penalty for late filing is generally higher than the penalty for late payment, so it's essential to submit your tax return on time—even if you can't pay the full amount right away.

If you’re struggling to pay your tax bill on time, HMRC offers the "Time to Pay" service, which allows you to set up a payment plan for your tax liabilities.

How to Register for Self-Assessment

If this is your first time filing a tax return, you must register with HMRC by 5 October following the end of the tax year. You will receive a Unique Taxpayer Reference (UTR) number, which is essential for completing your tax return.

Keep in mind that registration can take up to 20 working days, so it's best to start the process as early as possible.

Step-by-Step Guide to Completing Your Self-Assessment Tax Return

When it comes time to complete your self-assessment, make sure you have all the necessary documents and information:

1. Income details: Gather all records of income from employment, self-employment, rent, investments, etc.
2. Employment income: Your P60 or P45 (if applicable).
3. Self-employed income: Keep records of all business income and expenses.
4. Pension contributions: If applicable, ensure you have details about your pension contributions, especially if you're eligible for tax relief.
5. Expenses and deductions: Keep track of any business-related expenses that might reduce your taxable income.

We highly recommend filing your tax return online, as this reduces the chances of missing information and errors.

How to Claim Pension Tax Relief

If you're a higher or additional-rate taxpayer, you can claim tax relief on your pension contributions through your self-assessment tax return. This could provide you with up to an additional 25% in tax relief on top of the standard 20% that basic-rate taxpayers receive.

Tax relief won’t go directly into your pension, but it will be refunded through one of the following methods:

• A direct refund to you
• An adjustment to your tax code
• A reduction in your current year’s tax bill

If you haven’t previously filed a self-assessment return, you may be eligible to claim tax relief for previous years, potentially recovering substantial amounts of money.

Avoiding Common Mistakes

To avoid penalties, ensure you:

• File on time: Missing deadlines can lead to significant fines and interest charges.
• Double-check your information: Inaccurate information may trigger fines or audits.
• Stay organized: Keep accurate records of all your income, expenses, and receipts throughout the year.

Paying Your Self-Assessment Tax

Once your self-assessment is complete, HMRC will send you a bill. You can pay this bill using several methods, including:

• Debit or credit card (online)
• Bank transfer (online or telephone banking)
• Cheque (by post)

For PAYE employees, if your tax due is under £3,000 and you file early, you may be able to have your tax bill deducted directly from your salary over the course of the next year.

What Happens If Your Circumstances Change?

If your income or employment status changes during the year (e.g., you become self-employed), it’s essential to inform HMRC by 5 October to ensure your tax return is accurate and up-to-date.

If you stop being self-employed and no longer need to file a tax return, notify HMRC to close your self-assessment account.

Should You Get Help with Your Self-Assessment?

While completing your self-assessment tax return is manageable for many, it can be complex and time-consuming, especially if your financial situation is more complicated. Hiring a professional accountant can help ensure accuracy and may also minimize your tax liability.

Additionally, the cost of hiring an accountant is tax-deductible, making it an even better investment.

Final Thoughts

Filing your self-assessment tax return doesn’t have to be overwhelming. By staying organized, preparing in advance, and understanding the deadlines and necessary documentation, you can streamline the process and avoid costly mistakes. Whether you handle the filing yourself or seek professional help, preparation is essential for success.

At Affotax, we’re here to provide expert financial guidance and ensure your tax return is completed accurately. Contact us today for personalized support and advice to help you navigate the self-assessment process seamlessly.

Maximize Your Tax Relief with Expert Assistance at Affotax

Need help with your self-assessment tax return? Our team of expert accountants is ready to assist you in completing your tax return accurately, ensuring you claim all eligible tax reliefs. Get in touch with Affotax today to make your tax filing process stress-free and efficient.

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