Self-assessment tips: how do I complete a tax return?

You may think if you are an employee paying tax through Pay as you Earn (PAYE), you may not need to submit a tax return with HMRC, but there are some circumstances in which you may have to.

Self-assessment can be daunting if you’re completing it for the first time, however, with a bit of preparation, you can make the process quicker, easier, and less of a chore.

With that in mind, discover our top tips on how to complete your self-assessment.

What is a self-assessment tax return?

Self-assessment is the process by which you tell HMRC how much money you've earned that year, and certain other details about your financial situation, so that HMRC can work out how much tax and/or National Insurance (NI) you need to pay.

It's otherwise known as 'filing your tax return', and usually you'll do this online.

Despite the term 'self-assessment' you don't have to do it yourself, as you can hire an accountant to do it for you.

An accountant is almost more likely to complete it accurately and minimise the tax you have to pay.

Who needs to submit a self-assessment?

If you earn a salary that’s paid through a PAYE payroll system or you’re only drawing pension income, you don’t usually need to fill in a self-assessment tax return because your income tax is already deducted at source.

Here are some examples of people who usually do have to carry out self-assessment (though it’s not an exhaustive list).

• Self-employed people
• People with more than one job
• People drawing a pension while continuing to work and earn
• Directors and partners of limited companies
• Anyone earning a certain amount from investments (including property)
• Ministers of religion
• People claiming child benefits who have earned above a certain amount
• Anyone who receives a P800 form (this comes from HMRC and explains that you didn’t pay enough tax)

Check on the government’s website if you’re unsure about whether you need to fill one in.

When do I need to submit my self-assessment tax form?

If you submit your self-assessment tax form online, you must do so no later than midnight on 31 January each year.

This is also the date your tax payment is due, so you should aim to complete it at least a few days before, and preferably much sooner (so you can ensure you have the funds to pay the tax that is due).

You can, in fact, submit your tax return at any time after the end of the tax year (5 April), so if you get into the habit of doing it early, you can forget about it for the rest of the year.

If you are sending your tax return through the post, it must be with HMRC no later than 31 October. Again, this is a good reason to tackle it as early as possible.

Do I have to pay all my tax in one go?

If you earn a similar amount each year, you may be able to spread out the cost of tax into two payments (this is called ‘payment on account’).

The first payment is due on 31 January, and settles your bill for the previous tax year.

The second payment is due on 31 July and pays in advance for the next year based on how much you’ve paid in the past.

If your tax bill is higher than expected, you must make a ‘balancing payment’ by 31 January in the following year. If you’ve overpaid tax, you should be able to get a refund, plus interest.

If you already paid more than 80% of your outstanding tax or your previous self-assessment tax bill was under £1,000, you will not be asked to do payment on account.

It’s helpful to have an accountant to organise these for you, at least for the first year, to make sure you pay the correct amounts.

What if I don’t pay my tax bill on time?

If you’re worried about paying your tax in time, call HMRC as you may be able to use the ‘Time to Pay’ service.

You may be able to set up a payment plan, so you pay your outstanding tax (of between £32 and £30,000) in instalments if you have no outstanding tax returns or debt with HMRC.

How do I register for self-assessment?

If you didn’t submit a form for the previous tax year, you’ll need to register before you can submit a self-assessment tax form.

The deadline for registration is 5 October (after the end of the tax year).

You can use this page to find out how to register for self-assessment as this depends on your circumstances.

When you register for self-assessment, you’ll receive a Unique Taxpayer Reference (UTR) number to set up your account, which you’ll receive through the post (as well as your activation code).

As this process can take up to 20 working days, you should register as soon as possible.

How to complete a self-assessment tax form: what do I need to know?

If you’re filling out your self-assessment tax return online, you’ll need to log into your account. 

It should be straightforward to fill in the online form if you have all the figures from the past tax year.

So make sure you have:

• Your P60 or P45 (if you were employed for that tax year)
• Your P11D (if you had one)
• Records of all your other income (earnings, rent etc)

You’ll also have to provide details of any tax avoidance schemes in which you participate (so that HMRC can confirm that these are legitimate).

As you can see, it’s a good idea to keep track of all this information throughout the year and store it in a safe place, so that when you come to fill in your self-assessment form, you just open the file and get going.

If you’re submitting a paper form by post, you’ll need to download the form from the government site and print it. It’s easier to make a mistake and accidentally leave a box blank, so online filing is recommended.

How to claim pension tax relief via self-assessment: what’s the process?

If you are a basic rate taxpayer, then your 20% tax relief on pension contributions will be added automatically.

However, if you are a higher rate (40%) or additional rate (45%) taxpayer, you will need to claim the additional 20% or 25% through your tax return.

This money won't be paid directly into your pension pot, but will be repaid to you in one of three ways:

• A tax rebate
• A change in your tax code (so you pay less tax next year)
• A reduction in this year's tax bill

You'll need to do this for every year that you pay tax at these higher rates, so if you haven't previously completed a self-assessment, you may have unpaid tax relief in arrears. 

You can make claims for up to four previous tax years, which may total many thousands of pounds of unpaid tax relief.

This will allow you to pay more into your pension without affecting your take-home pay.

What else do I need to watch out for with the self-assessment tax form?

The two main risks of self assessment are:

• Missing the deadline for submission and/or payment
• Entering inaccurate information

You may get fined if you file your tax return late. To avoid this, set reminders in your calendar and allow plenty of time to prepare your accounts.

HMRC may make allowances in exceptional circumstances, such as bereavement, but each case is judged individually.

If you are late paying the tax you owe, you’ll be charged interest on what you owe from the date the payment was due (31 January).

The penalty for late payment is less than the fine for late filing (£100), so even if you don’t have the cash to pay your bill, you should still submit your tax return on time.

Find out here how to deal with cash flow problems.

The risk of filing inaccurate information can be a bit trickier to overcome.

The best defence against this is good preparation by keeping rigorous track of all income, outgoings, expenses, profits and losses - in short, to have good bookkeeping in place.

Keep copies of invoices and receipts so you can confirm your books are accurate in the event of a tax inspection.

If you do make a mistake after you’ve submitted your self-assessment tax return, you can make changes until the deadline the year after.

How do I pay my self-assessment tax?

Once you have submitted your tax return, HMRC will calculate how much tax you owe them. They will send you a tax bill, which you can access by logging into your online account.

You can pay your self-assessment bill online by debit card (credit cards are not accepted), as well as through online or telephone banking. Cheques through the post are also accepted.

If you are employed and pay tax via PAYE, owe less than £3,000 via self-assessment, and submit your paper form by 31 October or online form by 30 December, you can pay your bill through your tax code.

This will spread self-assessment payments over a year by increasing the amount you pay through PAYE each month.

If you qualify, it will be set up automatically unless you specifically state on your tax return that you would rather pay a lump sum.

You can see if HMRC has received your payment in your online account, or you can ask for a receipt if you pay by cheque.

What if my circumstances change?

If you start earning income that is untaxed due to a change of circumstances, contact HMRC by 5 October.

They will let you know if you need to complete a tax return.

And if you’re no longer self-employed and don’t need to file for self-assessment in the future, let the taxman know so they can close your account.

Can someone help me complete my self-assessment tax return?

Self-assessment is simple to do if your finances are relatively simple and you know what you are doing. 

However, it can be time-consuming, and you may end up paying more tax than necessary if you aren’t sure about all the expenses and allowances you can claim. 

In the worst case scenario, you may make mistakes that result in a fine, which is why it’s wise to hire an accountant to take care of your tax returns if your finances are more complex.

Best of all, the cost of getting an accountant is a tax-deductible expense, making it even better value for money.

Get expert financial advice

Completing your self-assessment tax return doesn’t have to be a stressful experience. By staying organised, keeping accurate records, and meeting deadlines, you can streamline the process and avoid common pitfalls.

Whether you choose to handle it yourself or enlist the help of a professional, preparation is key. Remember, timely and accurate submissions can save you from penalties and ensure you’re making the most of available tax reliefs.

Let Unbiased match you with a qualified accountant who can ensure your self-assessment tax return is completed accurately and efficiently, helping you maximise your tax reliefs and avoid potential pitfalls.