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What is a Self-Assessment?

Self-Assessment is a once a year task, required by HMRC, for a host of individuals. Anyone who is self-employed or works through their own limited company will almost certainly need to complete one each year. They can potentially be a real headache and, depending on how on top of your personal finances you are, can be a long and arduous process.

How do I register for Self-Assessment?

Before you can start your Self-Assessment, you must register for with HMRC. Your own circumstances will depend on when and how you’ll register:

  • If you’re self-employed – need to register for Self-Assessment and Class 2 National Insurance. This can be done online or via the post.
  • If you’re not self-employed – need to register online by 5th October if you’ve not sent one previously. You’ll also need to create a new account online on HMRC’s website.

What information do I need to complete a Self-Assessment?

Once you’re registered with HMRC, the key information you need at hand to complete your Self-Assessment are:

  • National Insurance number – ensures your tax and NI is recorded, and never changes
  • Unique Taxpayer Reference (UTR) – a 10-digit code issued once registered, which also never changes
  • Log of income – earned in the tax year, such as employment (found on your P60) or income from self-employment, dividends, pensions and other sources.
  • List of expenses – incurred through self-employment, of which can help offset your tax liability (providing they are allowable)
  • Any charitable donations – which also can be utilised to relieve your tax liability

Self-Assessment deadlines, submission and payment

The key dates and deadlines regarding Self-Assessment to be aware of are as follows:

  • Tax year: always runs from 6th April to the follow 5th April
  • Registration deadline: 5th October
  • Paper deadline submission: 31st October (6 months after tax year end)
  • Online deadline submission: 31st January (9 months after tax year end)
  • Payment date: 31st January (9 months after tax year end)

How you choose to submit your return is your preference. In the digital age, paper submissions are increasingly less common. However, opting for the paper submission means your deadline is 3-months earlier than submitting online – so you’ll need to be prepared. Remember, whether you or your accountant is preparing your Self-Assessment, it’s always best to start as early as possible to leave enough time to calculate everything correctly.

Late submission of payment will usually result in a penalty. The penalty charge starts at £100 for a submission that is up to 3 months late, and will increase with interest thereafter. Penalty charges can be appealed, providing you have a reasonable excuse such as a serious or life-threatening illness.

Worth noting that you’ll need to make additional payments, known as a ‘payments on account’ if your tax bill is greater than £1,000 in a year. In short, these are advanced payments towards next year’s tax bill, which will be deducted from next year’s liability. The point being that if your tax bill is greater than £1,000, you will have to pay more tax than you might have thought (particularly for your first Self-Assessment). To help, HMRC have provided some guidance found here.

I need to complete my Self-Assessment, but I’m still unsure how?

If you’d like help with completing your Self-Assessment, or the ongoing admin of running your business, then you might want to consider whether you would benefit from a dedicated accountant. No matter the size of your business, an accountant will prove a valuable resource, taking the leg work out of searching for answers yourself, such as the topic discussed above. This will result in you spending less time scouring the internet, and more time focusing on the day-to-day operations to help your business thrive.

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