What is Self Assessment? | NatWest

 

 

 

What is Self Assessment?

Self assessment is a system used by HM Revenue & Customs (HMRC) to collect income tax  if you have more  complex tax affairs than a basic salary paid under PAYE (pay as you earn).

You may need to fill out a self assessment tax return if, within a tax year you:

  • Are self-employed or a business owner/director without an annual salary
  • Get any extra income from assets, like a rented property
  • Have a pre-tax investment income of £10,000 or more
  • Have an income from abroad that you need to pay tax on, or live abroad and have a UK income
  • Are an employee or pensioner with an annual income of £100,000 or more

How and when do I fill out my tax return?

 

You’ll have to fill out your tax return after the end of the tax year, which runs from the 6th April to 5th April the following year. You can fill out a SA100 paper form and send it to HMRC in the post by the 31st October, or you can do it online by the 31st January, but don’t forget to register for self assessment by the 5th October. To do this, you’ll need your Unique Taxpayer Reference (if you’ve submitted a self-assessment return before), National Insurance number and post code. Make sure you’re prepared and you’ve left yourself enough time to register before the deadline though, as your code can take up to two weeks to arrive. 

When will I need to pay my tax?

Payment is usually due on 31st January, following the end of the tax year. If you miss this payment HMRC will charge you a penalty and interest. If you don’t pay this off, they’re likely to take further action against you by collecting what you owe through earnings, pensions or even by selling your assets. HMRC may also charge penalties if you submit your return late, so it’s really important to plan ahead to avoid any unnecessary charges.

 

Depending on amount of tax you have due, you might need to make payments on account. If that is the case, the first payment is due on 31st January during the tax year, with a secondary payment due on 31st July following the tax year. If any further tax is due, a balancing payment will be payable on the normal tax due date of 31st January following the tax year.

The information contained on this webpage is based on our understanding of UK tax legislation and HMRC Interpretation. The contents of this webpage do not constitute tax advice and are meant as a general guide only. If you are unsure of your tax obligations or responsibilities you are recommended to seek professional tax advice. Tax reliefs referred to are those applying under current legislation, which may change. The availability and value of any tax reliefs will depend on your individual circumstances.

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