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What is a self-assessment?

For millions of people in the UK, your income tax is worked out for you. It's automatically deducted from your salary before you get paid.

But many have to file a self-assessment tax return. This is to calculate what you owe to HMRC (Her Majesty's Revenue and Customs) on income that hasn't been taxed at source.

The deadline for self-assessments for the 2018-19 tax year is midnight on 31 January 2020. If you don't submit it on time, you could be fined.

Here's our guide to help you find out if self-assessment applies to you and what you may need to do.

Do you need to do a self-assessment?

There are three factors that influence whether you need to do a self-assessment. These relate to:

  • employment
  • other income
  • benefits

Employment

If you're on the payroll of the company where you work, the income tax you owe will be taken off your salary before you receive it. 

This is a system called PAYE (pay as you earn), which means you usually don't have to complete a self-assessment tax return.

But you will need to do a self-assessment if you're either of the following:

  • self-employed as a sole trader and earn more than £1,000 per tax year
  • a partner in a business partnership

Other income

You may also need to do a self-assessment on other income including:

  • rent received from property you own
  • tips and commission
  • income received from savings, investments and dividends
  • any foreign income

You can check whether you need to do a self-assessment by using a tool on the Government’s website.

Benefits

There are other reasons why you might need to fill in a self-assessment tax return.

If you receive Child Benefit, you'll need to submit a return if you (or your partner) have an income that’s more than £50,000. This is because you'll have to pay the High Income Child Benefit Charge.

Some people also choose to do a tax return so they can claim certain types of Income Tax relief.

Another reason to complete a self-assessment return might be to prove you're self-employed so you can claim things like Tax-Free Childcare or Maternity Allowance.

If you're still not sure whether you need to send a tax return, contact the HMRC self-assessment helpline on 0300 200 3310 to check.

When is the deadline?

Each self-assessment period covers a tax year beginning and ending in early April. 

The deadline for the 2018-19 tax year is at midnight on 31 January 2020. All online self-assessments covering the period from 6 April 2018 to 5 April 2019 have to be submitted by then. 

If you miss the deadline, there's a £100 fixed penalty.

If there are further delays, you can be fined further. After 3 months, there are extra penalties of £10 per day and these can increase again after 6 months and 12 months.

HMRC also charges interest on any tax due that's not paid by the deadline of 31 January 2020.

Find out how to register and file your self-assessment on the Government's website.

How can you pay HMRC?

Provided that you submit your online return on time, as soon as you’ve completed your self-assessment any amount you owe in tax is calculated automatically. 

Once you’ve submitted it, it’s easy to pay your bill using online banking. It’s similar to paying utility bills. Keep in mind that if you're an HSBC customer you'll be able to send up to £25,000 when making online payments and up to £10,000 via the mobile app.

To pay online you’ll need to find the relevant bank details for the HMRC so you can make the transfer.

The GOV.UK website also has information about other ways of paying such as by Direct Debit, at a bank or building society or by cheque.

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