SMALL BUSINESS RESOURCES

Tax return in the UK

4 min read

Completing and submitting a ‘Self Assessment’ tax return before the deadline is the sole responsibility of every self-employed individual in the UK. 

Meeting your tax return deadlines and understanding how to complete a tax return are key to remaining compliant with the HMRC.

If you fail to submit a return, or miss your deadlines, you may encounter avoidable punitive actions which could include a fine. It’s imperative you don’t let this slip.

Fortunately, a Self Assessment tax return is a relatively straight-forward affair. Let’s quickly run through some essential knowledge every self-employed individual needs to acquire.

What is a tax return?

A tax return (more formally known as a Self Assessment tax return) is a method of declaring your earnings and tax-deductible business expenses to the government to properly evaluate your taxable income and pay your tax bill. 

Self Assessment is also used to declare capital gains and to claim any applicable tax allowances and relief.

Who needs to complete a tax return?

Not everyone is required to complete and submit a tax return. 

If you earn wages through an employer, or are drawing funds from a pension for example, you won’t generally have to concern yourself with Self Assessment.

Similarly, if you’re self-employed and you earned less than £1,000 per annum, you will also not have to file a tax return.

You will be required to engage with the Self Assessment tax return process if:

  • you’re self-employed as a ‘sole trader’*
  • you’re a partner in a business partnership
  • you’re not self-employed but receive untaxed income, you must also submit a return. This remains true for those on wages or pensions. Such untaxed income includes:
    • renting out property
    • savings, investments, and dividends
    • commission or tips
    • foreign sources of income

*This is contingent on the fact that you must have also earned over £1,000 before tax.

If any of the above criteria describes you, the HMRC necessitates that you file a timely and accurate Self Assessment to remain compliant and avoid punitive action, including fines.

How to apply for tax return

If you’ve just started out as a self-employed individual in the UK and didn’t submit a tax return last year, you must first apply for Self Assessment before submitting your return.

The process for applying or registering for Self Assessment is as follows:

  • You must visit the following HMRC webpage to register online.
  • To register, you’ll have to sign-in to your business tax account and add Self Assessment to your account. To do this you’ll need your ‘Government Gateway’ user ID and password. You can also create a user ID at this juncture if you don’t already have one.
  • Once registered, you’ll receive a letter with your Unique Taxpayer Reference (UTR) number. This UTR number is a required inclusion when filing your return.
  • Lastly, you’ll receive a second letter containing an activation code.

How to do a tax return online?

While there remains a paper return option, completing a tax return online is the most common and simple method for Self Assessment.

To do a tax return online, simply follow this link and sign in with your Government Gateway credentials.

When do I need to do a tax return?
The following table outlines the deadlines associated with registering for Self Assessment, filing a tax return and paying your tax bill:

Register for Self Assessment

5 October 2021

Paper tax returns

Midnight 31 October 2021

Online tax returns

Midnight 31 January 2022

Pay the tax you owe

Midnight 31 January 2022

 

When to submit tax return

For the 2021 financial year, you must submit your online tax return by midnight 31 January 2022. For paper returns, you must have them submitted by midnight 31 October 2021.

How to check my tax return

If you’re unsure of the details you submitted, or need to confirm something, you may check your tax return online. 

To do so, simply sign in to your account, in the same way you signed in to submit your return. From there you’ll be able to view and check what you submitted.

 

That completes our brief guide to Self Assessment tax returns. If you’re self-employed in the UK, make sure you fully understand your responsibilities and never miss a tax return deadline. Fines may apply if you don’t comply.