Who needs to file a Self Assessment return?

Self Assessment is HMRC's way of collecting tax from people whose income isn't fully taxed at source. If you're employed and your tax is handled through PAYE, you may never need to think about it. But for a growing number of UK households, a return is compulsory.

The most common trigger is self-employment. If you're a sole trader and your trading income exceeds £1,000 in a tax year, you need to tell HMRC. That £1,000 isn't a target to aim for — it's a threshold. Earn £1,001 and you're in the system.

Side earners make up a huge slice of new returns. Selling on online marketplaces, tutoring, delivering, freelance design, dog walking, renting out a driveway — if it's regular and it's earning, HMRC wants to know. You should also file if you:

• Receive rental income from property (unless it falls under the Rent a Room scheme)
• Have untaxed savings or dividend income above your allowances
• Sold shares, crypto or a second property and made gains above the annual exempt amount
• Have foreign income that isn't already taxed in the UK
• Earn over £60,000 and claim Child Benefit, or live with a partner who does — the High Income Child Benefit Charge is collected through Self Assessment
• Are a company director, a minister of religion, or a trustee of certain trusts

If you're unsure, HMRC has a straightforward online tool that asks a handful of questions and tells you whether you need to register. It takes five minutes and saves a lot of guesswork.

The deadlines you need to diarise

The UK tax year runs from 6 April to 5 April. Everything else follows from that.

• 5 October — the deadline to register for Self Assessment if you've become newly self-employed or need to file for the first time. Miss it and you can be fined even if no tax is owed.
• 31 October — deadline for filing a paper return. Most people file online now, but the paper route still exists.
• 31 January — the big one. Online returns must be submitted and any tax owed for the previous tax year must be paid by midnight.
• 31 July — second payment on account, if you make them.

Payments on account trip up a lot of first-timers. If your tax bill is over £1,000 and less than 80% is collected at source, HMRC will ask for two advance payments towards next year's bill — one on 31 January and one on 31 July. It feels harsh, but it's simply a prepayment system. If your income drops, you can apply to reduce them.

Set calendar reminders a month early for each date. HMRC's servers get very busy in the final week of January.

What counts as allowable expenses

The golden rule is that an expense must be incurred wholly and exclusively for the purposes of your business. If it's partly personal, you claim the business proportion.

Typical allowable costs for a sole trader or side earner include:

• Office supplies, stationery, printer ink and postage
• Software subscriptions and business apps
• Business insurance and professional body fees
• Bank charges on a business account
• Advertising, website hosting and marketing
• Travel to clients, suppliers or temporary workplaces — but not your ordinary commute
• A proportion of phone, broadband and home bills if you work from home
• Protective clothing and uniforms, including cleaning costs
• Accountancy fees for preparing your return
• Training that updates existing skills (new skills are generally not allowable)

For home working, you can use HMRC's simplified flat rates — £10, £18 or £26 a month depending on hours worked — or calculate the actual proportion of your household bills. The flat rate is easier; the actual method often gives a bigger deduction. Pick one and be consistent.

What you can't claim

Getting this wrong is the fastest way to attract an enquiry. Don't try to deduct:

• Ordinary clothing, even if you only wear it for work
• Client entertaining, meals out or gifts
• Fines, penalties or parking tickets
• Personal travel, gym memberships or groceries
• Large equipment purchases as a straight expense — use capital allowances instead

Keep receipts for everything. HMRC expects you to hold records for at least six years after the 31 January filing deadline, and digital copies are fine.

Budgeting for the bill and staying ahead

Late filing penalties start at £100, then £10 a day after three months, capped at £900 — plus further charges at six and twelve months. Late payment adds interest and a 5% surcharge at 30 days. It's an expensive way to procrastinate.

The simplest habit is to move 25–30% of every payment you receive into a separate tax savings account the day it lands. When January arrives, the money is already there. If you're newly self-employed, remember that National Insurance contributions for the self-employed are calculated as part of the same return.

Finally, note that Making Tax Digital for Income Tax is rolling out for sole traders and landlords over the coming years, starting with those earning over £50,000. If you're near that level, it's worth reading up now rather than later. For everyone else, file early, keep clean records, and treat the January deadline as a formality rather than a crisis.