A Guide On How To Do A Self-Assessment

You know that feeling when tax season rolls around—a mix of dread and obligation. No one enjoys doing their taxes, but as a self-employed individual, you have an extra set of responsibilities in the form of self-assessment taxes.

Arjun Kumar
Arjun Kumar
Jan 5, 2024

In this guide, we'll walk you through everything on how to do a self-assessment, from registering to submitting your return before the deadline. You'll be able to get your taxes done efficiently by claiming all the deductions and credits you're entitled to. The process may not be fun, but at least you can cross it off your to-do list!

What is Self Assessment Tax?

Self Assessment Tax refers to income tax that you calculate and pay yourself. Rather than your employer deducting tax from your pay, you work out your tax liability based on your income and any allowances you're entitled to. You then pay any tax due by the deadlines.

To get started with the assessment, you first need to register for a tax return. This can be done online via the HMRC website. Once registered, you can submit your tax return, reporting details like:

  • Your income from employment, self-employment, partnerships, rental, investments, benefits etc.
  • Expenses. The costs you incur during your self-employment or rental business can be used to lower your profits.
  • Capital Gains. If you've sold assets you may have gains/losses.
  • And other information relating to your specific tax status such as tax residency.

While it can seem complicated, self-assessment simply requires you to keep good records and be diligent about reporting and paying what you owe to avoid potential penalties.

How to Calculate Self-Assessment Tax?

To calculate your self-assessment tax, you'll need to determine your total taxable income for the tax year. This includes income from all sources like your job, investments, rent, business profits, etc.

Once you have your total taxable income amount, you can calculate your tax liability. For the 2022-23 tax year, the tax rates in the UK are:

  • Basic rate: 20% on taxable income from £12,571 to £50,270.
  • Higher rate: 40% on taxable income between £50,271 and £125,140.
  • Additional rate: 45% on taxable income over £125,140.

You can check on the website for the latest tax rates each year. Multiply your taxable income by the appropriate tax rate to get your tax liability. For example, if your total taxable income is £40,000, your tax liability would be £8,000.

Once you’ve calculated your tax liability, you can make the tax payments via the HMRC website. You must pay your tax in full by the January 31 deadline to avoid any late payment penalties. You can also set up a payment plan to pay in instalments if you can’t pay it all at once.

If in doubt, you can also use our tax software, Taxd, to help determine your tax liability and see if you qualify for any tax relief.

How to Complete Self-Assessment Online?

Here are the steps to complete your self-assessment tax return online:

Register for Self Assessment

First, you’ll need to register for Self Assessment on the HMRC website. Provide some personal information like your National Insurance number to set up your account. HMRC will send you a 10-digit Unique Taxpayer Reference or UTR number within a few days. Keep this number handy for filing your return.

Calculate Your Tax

Next, gather records of your income and any deductions or credits you’re eligible for. You can use the HMRC tax calculator tool to determine how much tax you owe for the tax year. You can also take the help of Taxd to calculate your taxes. Be sure to double-check that the amount seems accurate based on your income and deductions.

File Your Return

Once you have your UTR and know how much tax is owed, you’re ready to file. Log into your HMRC account and select “File your Self Assessment return.” Choose the tax year you need to file for. Answer a series of questions about your income, deductions, and tax owed. Finally, review and submit your return.

Pay What You Owe

If there’s a balance due for your self-assessment tax, you’ll need to pay it. You can pay via direct bank transfer, debit/credit card, or cheque. HMRC will deduct the payment from your account on the date you specify. You’ll have to pay the interest and penalties if you miss the deadline or underpay.

That covers the basic steps for completing your self-assessment tax return online.

What are Payments on Account?

Payments on account refers to paying instalments of your tax liability throughout the tax year before your Self-assessment is due. This helps ensure you don’t end up with a large tax bill all at once. If you owe more than £1,000 in tax for the year, you’ll typically make payments on account in two instalments - one in January and one in July. The payments are based on your estimated tax liability for the year.

Filing Non-Resident UK Tax Returns for Expats

If you live abroad but still have UK tax obligations, you’ll need to submit a self-assessment tax return as a non-resident. The process is similar to residents, but there are a few key differences to be aware of.

As an expat, you’re required to report your UK income like rent, pensions, or interest earned in British bank accounts. You’ll calculate your UK taxes owed based only on your UK income, any foreign income you earn is not taxable in the UK.

To file a non-resident UK tax return, you must register for a self-assessment online and choose “non-resident” as your status. You’ll report details like your overseas address and any UK income on the tax return form SA1. The deadlines are the same as for residents: register by October 5 and file your return by January 31.

However, as a non-resident, you may owe less in taxes or even no tax at all. The UK has double taxation agreements with many countries that give certain tax benefits to expats. You may be eligible for non-resident tax relief on some types of UK income like pensions or interest.

You should also check if the Statutory Residence Test applies to you. If you meet certain conditions showing your main home is now abroad, you’ll be considered non-resident for tax purposes. This can also provide some tax relief and simplify filing UK tax returns online.

Final Words

So there you have it, a complete guide to navigating the self-assessment tax process from start to finish. While the deadlines and paperwork can seem daunting, taking it step by step and staying on top of things will help make the process as painless as possible.

Remember, you've got this under control as long as you register, calculate what you owe, and submit your return on time. The taxman will get his due, but at least you can rest easy knowing your taxes are done for another year.

Sign up at Taxd, a self-assessment software to help you through the process.

FAQs On How to Do Self-Assessment

1. How to do a self-assessment tax return online?

Log into your HMRC online account and select “File your Self Assessment tax return” under the Self Assessment tab. This will take you to the tax return form. Work through the sections, entering details like your personal information, income, benefits, pensions, and expenses. Refer to your records as needed.

2. For whom is a self-assessment tax return required?

A self-assessment tax return is typically required if you are self-employed, a director of a firm, have a sizable income from investments or rental properties or have several sources of income in addition to your normal job.

3. What information will I need to do a self-assessment?

Have records of your income and any deductible expenses handy. This includes payslips, P60 forms, interest statements, dividend vouchers, business income and expense receipts, etc. You’ll also need your Unique Taxpayer Reference (UTR) number and any activation codes HMRC sent you.

4. What if I have questions or get stuck?

Don’t worry, HMRC’s helplines and webchat are there to assist you. You can also save your progress and come back to complete the form later. Many questions provided on-screen help text with guidance. You can even take the help of Taxd for a smooth process.

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