What is Self Assessment?
Self Assessment is the system HMRC uses to collect income tax from people whose income is not taxed at source. Here is what it means and how it works.
In one sentence
Self Assessment is the way HMRC collects income tax from people whose tax cannot be deducted automatically through PAYE.
Quick answer
- It is HMRC's system for taxing income that is not already taxed at source
- You file an annual tax return online by 31 January each year
- It applies if you are self employed, a landlord, a director, or have other untaxed income
Steps
- 1Register with HMRC for Self Assessment if you have not before
- 2Get your Unique Taxpayer Reference (UTR) by post
- 3Set up your Government Gateway account
- 4Gather your income and expense records for the tax year
- 5Complete and submit your tax return online
- 6Pay any tax owed by the deadline
How Self Assessment works
In the UK, most people pay tax automatically through PAYE — their employer takes income tax and National Insurance off the payslip before they get paid. They never have to do anything.
Self Assessment is for everyone else. If you earn money that is not taxed before it reaches you — from being self employed, renting out a property, dividends from your own company, or other sources — HMRC needs you to declare it yourself and pay the tax owed.
Once a year you file a tax return summarising all your income, claim any allowable expenses or reliefs, and HMRC tells you what you owe. You then pay the bill by 31 January.
The Self Assessment tax year
The UK tax year runs from 6 April to 5 April the following year. So the 2024/25 tax year covers income earned between 6 April 2024 and 5 April 2025.
Your tax return for the 2024/25 tax year is due online by 31 January 2026, and any tax you owe must be paid by the same date.
What you report on a Self Assessment
- Self employment income and business expenses
- Rental income from UK or overseas property
- Dividends from companies, including your own limited company
- Interest from savings (above your Personal Savings Allowance)
- Capital gains from selling assets
- Foreign income
- Pension contributions and charitable donations (for tax relief)
How tax is calculated
HMRC adds up all your income, deducts your Personal Allowance (the amount you can earn tax free), and applies the relevant tax bands. The same Self Assessment also calculates Class 2 and Class 4 National Insurance if you are self employed.
If your tax bill is more than £1,000 and most of your income is not taxed at source, you may also have to make payments on account towards next year's bill.
What happens after you file
You get an instant calculation of what you owe. You pay HMRC by bank transfer, Direct Debit, or debit card. HMRC keeps your records for at least 22 months and may ask questions or open an enquiry if something looks off.
You must keep your own records for at least 22 months from the end of the tax year (or 5 years and 10 months if you are self employed).
Summary
- Self Assessment is HMRC's system for taxing untaxed income
- You file once a year, by 31 January, for the tax year that ended the previous April
- It applies if you are self employed, a landlord, a director, a high earner, or have other reportable income
- You declare your income, claim deductions, and pay the tax owed
Key terms
- Self Assessment
- The HMRC system for collecting income tax from individuals whose tax is not deducted automatically. You report your income, claim allowances, and pay any tax owed each year.
- PAYE
- Pay As You Earn, the way employers deduct income tax and National Insurance from salaries before paying employees. Most employees do not need to file Self Assessment.
- UTR
- Unique Taxpayer Reference, a 10-digit number HMRC gives you when you register for Self Assessment. You need it every time you file.
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