Glossary definition

What is Self-Assessment?

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Self-Assessment is the HMRC system used to collect Income Tax from people who need to report income that is not taxed automatically.

It is most commonly used by self-employed people and landlords, but it can also apply to people with other sources of untaxed income.

Self-Assessment allows HMRC to calculate how much tax you owe based on the income and expenses you report through a tax return.

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What is Self-Assessment?

Self-Assessment is the name of the system used by HMRC to collect Income Tax.

You may need to use Self-Assessment if you are self-employed, receive rental income, are a partner in a business partnership, need to pay Capital Gains Tax, pay the High Income Child Benefit Charge, or receive other untaxed income from sources such as savings, investments, or pensions.

To use Self-Assessment, you first need to register with HMRC.

Once registered, you receive a Unique Taxpayer Reference (UTR), which is linked to your tax account.

Who uses Self-Assessment?

You may need to complete a Self-Assessment tax return if you:

• are self-employed
• receive rental income as a landlord
• are a partner in a business partnership
• need to pay Capital Gains Tax
• need to pay the High Income Child Benefit Charge
• receive untaxed income from savings, investments, pensions, or other sources

How Self-Assessment works

Through a Self-Assessment tax return, you report your income and expenses to HMRC. This information is then used to determine how much tax you need to pay.

If you submit your tax return online, HMRC will calculate your tax liability for you. Most people use the online service rather than submitting a paper return.

Key Self-Assessment deadlines

The main Self-Assessment deadlines are:

• 31 October for paper tax returns
• 31 January for online tax returns
• 31 January for paying any outstanding tax liability

You may also need to make a payment on account for the current tax year if HMRC requires this.

Self-Assessment and PAYE

If you are employed, Income Tax is deducted automatically from your wages through Pay as You Earn (PAYE).

Many people who pay tax through PAYE never need to complete a Self-Assessment tax return.

However, you may still need to use Self-Assessment if you earn additional income outside your employment, such as rental income or income from self-employment.

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