Self-Assessment: a complete guide for the UK self-employed

What is Self-Assessment?

Self-Assessment is the method HM Revenue & Customs (HMRC) uses to collect Income Tax from individuals who earn income that isn't taxed at source, such as through an employer's PAYE system. This means if you're self-employed, a landlord, or have other untaxed income, you are responsible for reporting it to HMRC.

Under Self-Assessment, you must declare all your taxable income, claim any allowable expenses and reliefs, calculate your tax liability, and ensure your payments reach HMRC by the deadlines.

Who needs to complete a Self-Assessment tax return?

Not everyone needs to complete a Self-Assessment tax return. However, you generally must register and file if any of the following applied during the tax year (6 April to 5 April):

• You were self-employed as a sole trader and earned more than £1,000 (before taking off any tax reliefs).
• You were a partner in a business partnership.
• You received income from renting out property.
• You received significant untaxed income, such as tips, commission, or income from savings, investments, or dividends above certain thresholds.
• You had taxable foreign income.
• You need to pay Capital Gains Tax, for example, from selling shares or a second home.
• You are a company director (unless it's a non-profit organisation).
• Your total taxable income was over £100,000.
• You, or your partner, received Child Benefit and your income was over £50,000 (High Income Child Benefit Charge).

If you're unsure, it's always best to check with HMRC or your accountant.

Key deadlines for the 2026/27 tax year

The UK tax year runs from 6 April to 5 April. For the 2026/27 tax year (which ends on 5 April 2027), these are the crucial dates:

• 5 October 2027: Deadline to register for Self-Assessment if you need to file a tax return for the first time for the 2026/27 tax year.
• 31 October 2027: Deadline for submitting a paper Self-Assessment tax return for the 2026/27 tax year.
• 31 January 2028: Deadline for submitting your online Self-Assessment tax return for the 2026/27 tax year. This is also the deadline to pay any tax you owe for the 2026/27 tax year and your first payment on account for the 2027/28 tax year.
• 31 July 2028: Deadline for your second payment on account for the 2027/28 tax year.

Missing these deadlines can lead to penalties.

What to include in your tax return

To complete your Self-Assessment tax return accurately, you'll need to gather specific information and documents:

• Your personal details: Your Unique Taxpayer Reference (UTR) and National Insurance number.
• Income details:
• Self-employment income: Records of all your business income and expenses. If your turnover is below £90,000, you can enter total expenses without itemising them.
• Employment income: Your P60 form, showing your salary and tax deducted, and P11D forms for any benefits in kind.
• Rental income: Records of all rent received and allowable property expenses.
• Savings and investment income: Certificates of interest from banks and building societies, and dividend vouchers. (Interest from ISAs is tax-free and not declared).
• Pension income: Details of any private or state pensions received.
• Foreign income: Details of any income from abroad.
• Capital gains: Records of any assets sold and the profit made.
• Allowances and reliefs: Details of any pension contributions, Gift Aid donations, or other tax reliefs you are claiming.

For the 2026/27 tax year, the Personal Allowance (the amount you can earn before paying Income Tax) remains at £12,570. The Dividend Allowance is £500, and the Capital Gains Tax Annual Exempt Amount is £3,000.

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)

From April 2026, if you're a self-employed individual or landlord with a business or property income over £50,000, you will need to follow Making Tax Digital (MTD) rules for Income Tax Self-Assessment. This means:

• Keeping digital records of your income and expenses using MTD-compatible software.
• Sending quarterly updates of your income and expenses to HMRC through your software.
• Sending an End of Period Statement (EOPS) for each income source.
• Submitting a final declaration (your tax return) by the 31 January deadline.

Penalties for late filing and payment

HMRC applies penalties automatically if you miss deadlines.

• Late filing penalties:
• An initial £100 penalty if your return is one day late.
• Additional daily penalties of £10 per day (up to 90 days) if it's over three months late.
• Further penalties of 5% of the tax due or £300 (whichever is greater) after six and twelve months.
• Late payment penalties:
• A 5% penalty on any unpaid tax after 30 days.
• An additional 5% penalty if the tax is still unpaid after six months.
• A further 5% penalty if the tax remains unpaid after twelve months.
• Interest is also charged on unpaid tax from the day it becomes overdue.

Common mistakes

• Not registering on time: Missing the 5 October registration deadline can lead to penalties, even if you file and pay on time.
• Incorrectly claiming expenses: Only expenses "wholly and exclusively" for business purposes can be claimed. Including personal costs is a common error.
• Forgetting to declare all income: All taxable income, including small amounts of interest or dividends, must be declared, even if allowances apply.
• Ignoring payments on account: Many self-employed individuals need to make two payments on account each year towards their next tax bill. Forgetting these can lead to late payment penalties.
• Leaving it to the last minute: Rushing your return increases the risk of errors and can make it difficult to gather all necessary information or seek help if needed.