Self-Assessment started in 1997; the idea being that taxpayers can easily complete their own tax returns. The reality
has turned out to not be quite so simple.
The tax year runs from 6th April to 5th April in the following year, and under self-assessment it is up to the
individual taxpayer to calculate their tax liability and pay the tax due by the due date.
The majority of people in the UK are taxed under PAYE and do not have to complete a Self-Assessment tax return.
However, where you have income that is not taxed at source or may be liable to higher rate tax on income that has
only had basic rate tax stopped you will probably need to complete a self-assessment return. It is your
responsibility to notify chargeability to tax to HMRC.
The following people usually have to complete one...
If you are unsure whether you need to complete one, please contact us for advice.
If you are required to complete a return, they are normally issued to you at the beginning of April each year. The basic return is 8 pages but many sources of income require supplementary pages to be completed as well. Some people receive a short tax return of only 4 pages.
As well as your income it deals with the allowances and reliefs that you can claim.
Paper returns must be filed by 31 October following the end of the tax year and HMRC will calculate your liability for you. For online returns you have until 31 January following the end of the tax year to file the return. If you file the tax return online through the HMRC website the software will calculate your tax liability for you.
The penalties for late Self-Assessment returns are as follows:
The penalties are applicable even if no tax is due.
The method of payment usually involves two payments on account of your tax liability as follows...
These are based on the net income tax and Class 4 NIC liability of the previous tax year .
A final payment (or repayment) is due on 31 January following the tax year.
Thereafter, there is a 5% surcharge on any taxes that remain unpaid after 28 February, and a further 5% on taxes not paid after 31 July.
For example...
If your total tax liability for 2024/25 is £8,000 and for 2025/26 it is £10,000, your payments would be as follows:
In calculating the level of instalments any tax due on capital gains of the previous year is ignored.
The payments on account are not required if...
You can also apply to have the payments on account reduced if you expect your liability for a tax year to be less than the previous year.
There are changes to late submission penalties and late payment penalties if you're required to use Making Tax Digital for Income Tax from April 2026. The current penalties will still apply to previous tax years. For example, if you use Making Tax Digital for Income Tax from 6 April 2026, current penalties will apply to your 2025 to 2026 tax return deadline of 31 January 2027.
The new late submission penalties are points based. For each quarterly update (for tax years after 2026 to 2027) or tax return deadline you miss, you'll get a penalty point. The penalty point threshold is 4 points. If you reach this, you'll get a £200 penalty and a further £200 penalty each time you miss another submission deadline You can only get one penalty point per deadline. This applies even if you have more than one business and send more than one quarterly update late (for tax years after 2026 to 2027).
Late payment penalties apply to payments not paid in full, by the relevant due date. The penalty amount depends on how long it takes you to pay what you owe. The sooner you pay your overdue amount, the lower the penalty amount will be. These penalties are not points based and will apply to each late payment. The rates will be 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days, up to 2 years.
HMRC can correct a Self Assessment return within nine months of the return being filed in order to correct any obvious errors or mistakes in the return and an individual can amend their Self-Assessment at any time within 12 months of the filing date.
HMRC has one year from the date the return is received by HMRC to enquire into a Return. This therefore offers a real incentive to file your tax return early. If HMRC has not opened an enquiry by then, they cannot subsequently enquire into it unless they make a discovery of information relevant to the return or the taxpayer makes an error or mistake claim. Enquiries can be aspect enquiries into just one aspect of the return, or they can cover a full enquiry into the whole return, in which case expert advice should be sought.
By law you must keep all records in support of the tax return for at least 22 months after the end of the tax year, but if you are self-employed or have rented property the records must be kept for five years and ten months after the end of the tax year.
You can be fined up to £3,000 if you fail to maintain or retain adequate records to back the return.
We can assist you with completion of your Self-Assessment return, advice on payment of liabilities and deal with any enquiries into your return.