Self Assessment is HMRC's system for collecting Income Tax from people whose income isn't taxed automatically. If you earn money outside of PAYE, you'll need to tell HMRC yourself — and missing deadlines can get expensive. Let's break it down.
What is Self Assessment?
- It's HMRC's way of making sure you pay the right tax.
- You report your income, expenses, and any tax reliefs.
- Returns cover the UK tax year: 6 April to 5 April.
- You can file online (deadline: 31 January) or by paper (deadline: 31 October).
Who needs to file?
Here are the most common groups:
Self-employed
- Earned more than £1,000 (before expenses) as a sole trader
- Run your own business or freelance regularly
- Need to pay Class 2 or Class 4 National Insurance
Landlords
- Receive rental income from property in the UK or abroad
- Claim expenses (like repairs or letting agent fees) against rental income
- Have profits that HMRC needs to tax
High-income earners
- Earn over £100,000 a year
- Need to pay the High Income Child Benefit Charge
- Receive untaxed income (like dividends, savings interest, or side hustles)
Other cases
- You had to pay Capital Gains Tax (e.g. from selling shares or property)
- You're a partner in a business partnership
- You earn income from abroad that HMRC needs to tax
This list isn't exhaustive — HMRC has a full breakdown of who must file. If you're unsure, we can guide you through.
Deadlines you need to know
- 5 October: Register for Self Assessment if it's your first time.
- 31 October: Deadline for paper returns.
- 30 December: Deadline if you want tax collected via PAYE.
- 31 January: Deadline for online returns and first payment on account.
- 31 July: Second payment on account due.
What happens if you file late?
- Miss the deadline → £100 fine straight away.
- 3 months late → £10 per day, up to £900.
- 6 months late → £300 or 5% of the tax due (whichever is higher).
- 12 months late → Another £300 or 5%.
That's £1,000 minimum if you ignore it for three months!
Late payment penalties
It's not just about filing — paying late also costs you. Here's how it stacks up:
- 30 days late: 5% of what you owe, plus interest
Example: If your bill is £2,000, that's £100 added.
- 6 months late: Another 5% added, plus interest
That's another £100 on the same £2,000 bill.
- 12 months late: Yet another 5% added, plus interest
By now, you've accumulated £300 in penalties — plus interest.
Payments on account
If your tax bill is over £1,000, HMRC asks for payments on account — basically advance payments towards next year's bill.
- First instalment: due in January (same as your main bill).
- Second instalment: due 31 July.
Miss either of the instalments and penalties apply.
Can't afford to pay?
HMRC offers Time to Pay arrangements. Think of it as a payment plan: you spread the cost with monthly instalments instead of one big hit. It's worth looking into if cash flow is tight.
Can you appeal?
Sometimes, yes. HMRC may waive penalties if you've got a “reasonable excuse”. You can appeal using form SA370 or the online service.
Need help?
We make Self Assessment simple. Whether you're self-employed, renting out property, or earning extra income, our team can guide you through the process. Contact us to explore how we can work together — call 01235 797 723 or email at enquiries@lonaa.co.uk today.