You’ve just started your new business as a self-employed professional or sole trader. You’re making money and receiving an income but how do you pay Income Tax and National Insurance? The answer is Self Assessment and submitting a tax return once a year.
Jashoda Pindoria from HM Revenue and Customs (HMRC) explains what Self Assessment is and what you may need to do.
What is tax Self Assessment?
Self Assessment is how the self-employed and sole traders pay tax on their income. You declare your income by completing a tax return and then pay any tax owed. The current Self Assessment reporting period is for the 2023 to 2024 tax year (6 April 2023 to 5 April 2024).
I think I might need to do a tax return this year. How do I check?
If you’re new to Self Assessment and not sure where to start, my advice is to use the ‘check if you need to send a tax return’ tool on GOV.UK. You simply answer a few straightforward questions and the tool helps you decide if you need to complete a tax return.
If you regularly sell goods or provide services through an online marketplace, then have a look at HMRC’s information sheet on selling online and paying taxes. This will help you decide if your activity should be treated as a trade and if you need to complete Self Assessment tax return.
How do I get started?
If you need to complete a tax return for the 2023 to 2024 tax year, you’ll need to register for Self Assessment by 5 October. You can watch our helpful YouTube videos which take you through the online registration process every step of the way.
Once you have registered, HMRC will send you your Unique Taxpayer Reference (UTR) – a 10 digit reference number that is used to identify your Self Assessment tax record. Your UTR is also stored in the HMRC app or your online account.
Doing it online is the quickest and easiest way plus there’s extra help every step of the way. When you’re ready to start your tax return you’ll need your UTR and National Insurance number, as well as details of your income, earnings and other financial records.
When is the deadline?
The deadline for submitting your Self Assessment returns online and paying your tax for the 2023 to 2024 tax year is 31 January 2025. If you miss the deadlines, you may incur penalties but these will be waived if you have a reasonable excuse.
If you have paid too much tax, we’ll let you know and repay you once we’ve processed your Self Assessment return. You can also check if you’re due a refund in the HMRC app once you’ve filed your return.
What information do you need to include on your return?
You will need to report your taxable income on your tax return so you can pay any tax owed. We want to know about any income you have already paid tax on (for example, if you’re employed and paid Income Tax and National Insurance through PAYE) as well as any expenses so we can accurately calculate if any tax is due.
You’ll also need information on any contributions you’ve made to charity or pensions that may be eligible for tax relief.
You will need to keep records such as bank statements, invoices, contracts and receipts for your income and outgoings.
I’m worried about getting my tax return wrong. Where can I go for help?
HMRC wants to help you get your tax right. There are many ways to get help and support, this includes:
- a wide range of ‘how to’ and ‘explainer’ videos on YouTube
- live webinars that you can join where you can ask questions, or if you cannot attend you can watch them on demand
- tools that include HMRC’s digital assistant, self-employed tax calculators and the HMRC app
Can I ask someone else to fill my Self Assessment in for me?
Yes, you can. You can appoint someone to fill in and send your tax return, for example an accountant, friend or relative. You will need to tell HMRC they can act on your behalf but it remains your responsibility to ensure the return is accurate and submitted on time.
Please do not share your HMRC login details with anyone, including your tax agent.
How do I pay?
The deadline to pay any Self Assessment tax owed is 31 January 2025. There’s a range of payment options, including paying through the HMRC app. You can also set up a Budget Payment Plan where any payments you make will be used to pay your next tax bill.
If you can’t pay your tax bill, then don’t despair but you will need to act.
You may be able to set up a payment plan, known as a ‘Time to Pay’ arrangement. This is where you pay your tax bill in regular instalments over an agreed period.
You may be eligible to do this yourself online if you owe less than £30,000, are within 60 days of the payment deadline and do not have any other tax debts.
Will I need to do Self Assessment next year?
Yes, if you continue to meet the Self Assessment criteria in the ‘check if you need to send a tax return’ tool on GOV.UK.
If your circumstances change and you believe you no longer believe you need to complete a tax return, then you must tell HMRC as soon as the change happens. You can find out how to stop your Self Assessment through our online videos.
Don’t ignore an HMRC letter about completing a tax return, even if you think you haven’t got anything to pay. Get in touch with us if you don’t think you should complete one as you could receive a penalty if we’re expecting a return and don’t receive one.
I’m self-employed and do Self Assessment, so is there anything else I need to do?
You need to make sure you are registered with HMRC as self-employed. This applies to those who have been working for themselves for a while and people who are newly self-employed. You can find out more information about registering as a sole trader and setting up a business partnership on GOV.UK.
