How to complete a self-assessment tax return
The important things to know
- If you're self-employed, a sole trader or a company director you pay your tax using a self-assessment tax return.
- You need to complete your tax return by 31st January.
- (Limited companies pay corporation tax through a corporation tax return, and deadlines are different. If you need to work out the tax for your limited company, find out what you need to in our guide on how to calculate the tax for a limited company.)
- You'll automatically get sent a self-assessment tax return after you've registered as self-employed.
- You can use accounting software to complete your tax return. Make sure it's approved by HMRC by checking this list.
- It can be well worth getting an accountant on board to help with this, or at least to check what you've done yourself. Read our guide on how to find an accountant.
What you need to fill out
- If your business' annual turnover was less than £70,000, you fill out the 'short' form, which is only a few pages long.
- If turnover was more than £70,000, you need to complete the longer and more detailed 'full' form.
- If you're unsure which return you should be filling out, call the HMRC self-assessment helpline on 0845 900 0444.
- You can complete a paper tax return and post it to HMRC, or do it online.
- If you do it online, you have to complete the full form, but the deadline is three months later.
- You may also need to fill out additional pages, for things such as pension contributions or income from renting land or property. The booklet called 'How to fill in your Tax Return' that HMRC sends you along with your paper return (which you will get whether or not you want to complete your return on paper or online) will explain which additional forms you need and how to obtain them. (You can also find a link to this booklet below in the Resources section.)
- For the short form, you then need to provide details of any employment you've had in the last tax year, details of self-employment and your business' financial records, *allowable business expenses*, net profit or loss, tax allowances for vehicles and equipment, losses, Class 4 NICs and CIS deduction, and any other income you have received (such as dividends, benefits, and so on.)
- For the full form, you'll also need details of any UK savings and investments, UK pensions, annuities and benefits, life insurance gains and AVC refunds and any other taxable income.
Follow the steps below to make filling out your tax return as painless as possible:
- Read through booklet called 'How to fill in your Tax Return' that HMRC sends you along with your paper return before starting.
- Work out if you need to fill out any additional pages - request them from HMRC if necessary.
- Collect your financial records for the tax year that's just ended (starting and ending on 4th April), including your profit and loss account, business records and business expenses.
- Get together any relevant bank statements, dividend counterfoils, personal pension schemes and so on that you need - use HMRC's booklet 'How to fill in your Tax Return' to figure out what exactly you need.
- Get together any relevant forms such as P60, P45, P11D, PAYE notices of coding that you need - use HMRC's booklet 'How to fill in your Tax Return' to figure out what exactly you need.
- Stick to the deadlines below to avoid getting fined for a late return or payment.
- Make sure you've signed and dated a paper return.
Paying your business tax bill: how much and how
- If you fill out a paper return, HMRC send you a letter telling you how much tax you owe.
- If you do it online it's calculated on-the-spot.
- Your total tax bill takes account of the financial year ahead as well as the one you've just reached the end of. So in addition to what you owe for this tax year (your 'balancing payment'), you have to pay the same amount again to have it on account for the following tax year - since HMRC predicts you will owe the same in tax from one year to the next. (You need to notify your tax office if you expect to owe a very different amount in the following tax year.)
- The payment on account (for the year ahead) is split equally and paid in two instalments - the first combined with your balancing payment for the tax year that's just finished and due by 31st January, the second by July 31st.
- When you get to the end of the next tax year, any balance owed to you or that you owe, according to what you paid on account the previous year, is added to or deducted from your balancing payment for that year. In other words, if your tax bill is different from the previous year's tax bill, you will either have to pay HMRC the extra bit you owe on top of what you paid last year on account (if you owe more tax than you did last year), or they will knock what they now owe you off your current bill (if what you paid on account the previous year was more than you actually owe).
If you owed £1,000 for the tax year 2008/09, HMRC assume that you'll owe another £1,000 in 2009/10. That means you have to pay £1,500 by January 31st 2010 - your balancing payment for 2008/09 plus the first instalment of your payment on account for 2009/10. Then you pay another £500 by July 31st 2010 - the second instalment of your payment on account for 2009/10. If, say, you then got to the end of 2010 and realised that you actually owed £1,200 for tax year 2009/10, you'd have to pay £200 by January 31st 2011 as your balancing payment for 2009/10 (£1,200 less the £1,000 you'd already paid on account).
- You can pay by debit card, by phone, cheque, post office, or online - you'll need your taxpayer reference number.
- Paper returns: in by October 31st
- Online returns: completed by January 31st
- Penalty for late return is £100
- First instalment for tax payment: by January 31st (which means if you fill out your online return on 30th January, you'll have to pay on the same day)
- Second instalment for tax payment: by July 31st
What do I do as a limited company?
You need to pay corporate tax. Find out more in this guide on how to calculate tax for a limited company.
I'm part of a partnership - who fills out what?
Each partner needs to complete partnership pages as part of their individual tax return, but only one partner has to complete the partnership tax return.
What happens if I didn't make any profit or I made a loss?
Unfortunately, if you registered as self employed, you still need to complete a return and send it off in time. The return shows you where to indicate whether you've made a net profit or loss.
What if I don't know the exact figures I need to put in?
HMRC advises you to use an estimate - a figure you want HM Revenue & Customs (HMRC) to accept as your final figure - or a provisional figure - one you want to use until you can confirm the actual amount (you must tell HMRC it is a provisional figure).
But it's best to give them a call on 0845 900 0444 to check either way.
What if I don't know whether I was paid through PAYE or not for work I did?
Your first stop would be to get in touch with the person who paid you for the work, but if that's not an option, call HMRC on 0845 900 0444 for advice, as there are different solutions for different situations.
What if I don't have my P45?
As above, your first stop would be to get in touch with your former employee, but if that's not an option, call HMRC on 0845 900 0444 for advice.