Filing a personal tax return can seem like a daunting task, but understanding when and why you need to submit one is key to avoiding penalties and staying on top of your tax affairs.
In this guide, we will walk you through everything you need to know about tax returns, from specific criteria to important deadlines you need to be aware of.
What is a personal tax return?
A self-assessment tax return is an annual form used by HM Revenue and Customs (HMRC) to tax income that has not been automatically taxed at source, such as income from self-employment, or tax gains from the sale of capital assets. .
The self-assessment system allows individuals to report their total income, claim any allowable expenses, claim tax relief, calculate their final tax liability, or claim any overpaid tax for the year.
Failure to file a tax return may result in a late filing penalty, and interest will accrue on any unpaid liabilities after 31 January.
How do I know if I need to complete a tax return?
Whether or not you are required to complete a personal tax return depends on your circumstances and income sources. You will typically have to complete a self-assessment return if you meet the following criteria:
- Self-Employed or Business Partner: If you earn more than £1,000 as a sole trader or a partner in a business partnership.
- Rental Income: If you receive more than £1,000 in income from a rental property that you own.
- High-Income Earners: If you earn a taxable net income of more than £150,000 annually.
- Foreign Income: If you reside in the UK and receive income from abroad, including foreign investments, property or employment.
- Dividend Income: If you receive dividends from stocks or shares in a company that exceed the £500 dividend allowance.
- Interest income: If you receive interest from a bank or building society over your allowance for the tax year. £1,000/£500/£0 for basic, higher and additional rate tax payers.
- Capital Gains: If you have earned a profit above £3,000 from selling a property or asset and owe Capital Gains Tax or if the sale proceeds on capital disposals were in excess of £50,000 (from 2024/25)
- Tax Relief: If you want to claim relief on pension contributions, donations or work-related expenses.
- High Income Child Benefit Charge: If your level of income means that some or all of the child benefit received needs to be repaid.
It is important to remember that not declaring this income can result in penalties. If you’re unsure about whether you need to file a return, consulting an accountant or tax adviser is highly recommended.
When do I need to complete a tax return?
Your personal tax return needs to cover the tax year (the 6th of April to the 5th of April). If you have never sent a tax return before and need to complete one, you must inform HMRC and register for self-assessment by the 5th of October.
If you are submitting a paper tax return, it must be sent to HMRC by the 31st of October. If you are filing your tax return online, you must submit it by midnight on the 31st of January following the end of the tax year.
Even if you file your return early, you must pay any tax due by the 31st of January, regardless of when it was submitted.
Failing to submit your tax return in time can result in an automatic £100 fine and interest on any unpaid tax from the date the payment was due. If you have missed the deadline due to illness or technical issues, it might be possible to appeal against the penalty. Keeping track of deadlines is crucial to avoid fines and additional charges so planning ahead or enlisting the help of an accountant will help you stay on top of your tax return.
How to Register for Self-Assessment
You can register for self-assessment online on HMRC’s official website. Once you have completed the relevant registration form based on your circumstances, you will be issued a Unique Taxpayer Reference (UTR) number, which you will need to use whenever you submit your tax return or communicate with HMRC about your self-assessment.
The deadline for registering for self-assessment is the 5th of October following the end of the tax year. If you earn income in the 2024/25 tax year, you must register by the 5th of October 2025.
What Documents are Required?
In order to ensure you complete your tax return accurately, you will need to gather relevant documents proving your income and financial activity over the tax year. Sourcing this information is essential for calculating your tax liability correctly.
When completing your tax return, you should use records of expenses and income from all sources, including self-employment, investments, capital disposals, charitable giving and pension contributions.
Keeping organised and thorough records throughout the year will make filing your tax return as simple and stress-free as possible.
Bespoke Tax Planning Services
At Cooper Associates Accountants, we understand that everyone’s financial situation is unique. Whether you are self-employed, a landlord or an investor, we offer bespoke tax planning services tailored to your specific needs, alongside our personal tax team who can assist with preparing and filing your self-assessment return.
Our team of experienced accountants are dedicated to helping you optimise your tax efficiency to ensure you meet all requirements and maximise potential savings.
Whether you are looking to claim specific allowances, explore tax relief or minimise your tax liability, we can help. Get in touch today to discuss how our team can guide you through the complexities of self-assessment and ensure your taxes are handled efficiently and correctly.
