Who must file Self Assessment
HMRC requires Self Assessment for taxpayers who do NOT have all income covered by PAYE. The criteria (any one triggers filing):
- Self-employed sole trader with turnover over GBP 1,000 (the trading allowance). Below GBP 1,000: no filing needed.
- Untaxed income (interest, dividends, rental) over GBP 2,500 not collected by PAYE.
- Total income over GBP 150,000 (additional-rate threshold).
- Company director (any company).
- Earning rental income over GBP 1,000 (or any rental loss to claim).
- Owed Capital Gains Tax on disposal of property, stocks, crypto, etc.
- High-Income Child Benefit Charge (HICBC) - one parent earns over GBP 60,000 and household claims Child Benefit. From 2024: HICBC tapered between GBP 60-80K (was GBP 50-60K), threshold for 100% clawback raised to GBP 80,000.
- Foreign income over GBP 300 (some thresholds vary by source).
- Income from a trust or estate.
- State Pension over your personal allowance (rare).
- HMRC issued a notice to file (e.g., random check).
- Claiming tax reliefs (higher-rate pension relief, charity gift aid claw-back for higher earners) - though most can be done via PAYE code adjustment.
If you DO NOT need to file but want to claim a refund (e.g. overtaxed via PAYE): use Form P87 instead.
What to include + common income types
2025-26 tax year covers income earned April 6, 2025 to April 5, 2026.
| Salary income | Self-employed income | Dividend income | Interest income | Rental income | Capital Gains |
|---|---|---|---|---|---|
| Use P60 totals (year-end summary from employer) | Schedule of trading income (gross sales) minus allowable expenses | Dividend allowance: GBP 500 in 2025-26 (down from GBP 1,000 in 2023-24) | Personal Savings Allowance: GBP 1,000 basic, GBP 500 higher, GBP 0 additional | Rent received minus allowable expenses (mortgage interest now restricted to basic rate credit, not deduction) | Annual Exempt Amount: GBP 3,000 (down from GBP 6,000 in 2023-24) |
| P11D for benefits (company car, healthcare, etc.) | Cash basis or accruals basis (cash basis simpler for under GBP 150K turnover) | Above allowance: 8.75% basic, 33.75% higher, 39.35% additional | Above PSA: at marginal rate | Furnished holiday lets have special rules | Above GBP 3,000: 18% basic on most assets (10% prior to April 2026), 24% higher (20% prior to 2026) |
| P45 if you changed jobs (use P45 from old + P60 from new) | Allowable expenses: business equipment, software, postage, business travel, home office, professional fees | Stocks ISA dividends: zero tax | Cash ISA interest: zero tax | Property allowance: GBP 1,000 | Residential property: 18% basic, 28% higher (24% from April 2026 on new disposals) |
| HMRC pre-fills employment data from PAYE returns; verify | Class 4 National Insurance: 6% on profits GBP 12,570-GBP 50,270; 2% above (rates from 2024 cut) | Crypto: same rates as other assets | |||
| Class 2 NI: voluntary above GBP 6,725 profit threshold (Class 2 abolished for those below threshold) |
| Deadline | Activity | Penalty if missed |
|---|---|---|
| October 31, 2026 | Paper return | GBP 100 + daily charges |
| January 31, 2027 | Online return + tax payment | GBP 100 + daily charges |
| January 31, 2027 | First payment on account | Interest at 8% |
| July 31, 2026 | Second payment on account (prior year) | Interest at 8% |
| Continuous | Keep records 6 years | Penalty for fraud |
Payments on account + January 31 mechanics
UK Self Assessment uses "payments on account" - advance estimated tax payments based on prior year liability.
If your 2024-25 total tax liability was over GBP 1,000 AND less than 80% was collected at source (PAYE)
- First payment on account: 50% of 2024-25 liability due January 31, 2026 (for 2025-26 year)
- Second payment on account: another 50% due July 31, 2026
- Balancing payment: due January 31, 2027 (to reconcile actual 2025-26 liability)
Worked example:
Liam, self-employed. 2024-25 tax + NI: GBP 12,000.
- Jan 31, 2026: pay GBP 6,000 (first POA for 2025-26)
- Jul 31, 2026: pay GBP 6,000 (second POA for 2025-26)
- Total advance paid: GBP 12,000 for 2025-26
- Jan 31, 2027: file 2025-26 return. Actual liability GBP 14,000.
- Balancing payment: GBP 14,000 - GBP 12,000 = GBP 2,000 due
- First POA for 2026-27: 50% of GBP 14,000 = GBP 7,000
- Total due Jan 31, 2027: GBP 9,000
- Jul 31, 2027: second POA for 2026-27 = GBP 7,000
If 2025-26 actual liability is LOWER than advance paid: HMRC refunds (or carries forward).
Reducing payments on account: if you know your 2025-26 income will be lower than 2024-25, you can apply to reduce POA via SA303 or online. Be careful - if you under-estimate, HMRC charges interest on the difference at 8% (April 2024 onward).
New employees moving to PAYE-only after self-employment: still owe POA for the year of transition; can request reduction.
Avoiding penalties + interest
| Late filing penalties (escalating) | Late payment penalties (separate from filing) | Worst case (no return filed, no tax paid) | Extensions |
|---|---|---|---|
| 1 day late: GBP 100 (flat, regardless of tax owed) | 30 days late: 5% of unpaid tax | 12 months late: GBP 1,200+ filing penalties + 15% of unpaid tax + interest | HMRC will reduce penalties for "reasonable excuse" (illness, bereavement, technical issues with HMRC site, etc.) |
| 3 months late: GBP 10/day for up to 90 days (max GBP 900) | 6 months: another 5% | File Form SA371 to appeal | |
| 6 months late: 5% of tax due, or GBP 300, whichever is greater | 12 months: another 5% | Time to Pay (TTP) arrangement: if you cannot pay in full, contact HMRC to spread payment over 6-12 months. Interest applies but no penalty. | |
| 12 months late: another 5% or GBP 300 | Interest: 8% from due date (April 2024 onward) |
2024 changes: digitization of Self Assessment - "Making Tax Digital" (MTD) for Income Tax Self Assessment was delayed to 2026-27 for income over GBP 50K, and 2027-28 for over GBP 30K. From these dates, quarterly digital updates required (instead of annual return) for self-employed + landlords.
Common Self Assessment mistakes
- Missing the January 31 deadline. GBP 100 flat penalty even if you have NO tax to pay.
- Forgetting payments on account. Self-employed often pay full year tax in January, then are surprised by second POA in July.
- Not declaring crypto gains. HMRC has data-sharing agreements with major exchanges (Coinbase, Binance). Failure to report is tax evasion.
- Side hustle income under GBP 1,000 - failing to file. Trading allowance covers this; no filing needed if total side hustle under GBP 1,000.
- Property income forgotten. Rental from a flat counts. Even Airbnb hosting.
- Claiming home office expenses without methodology. HMRC scrutinizes. Use simplified flat rate (GBP 6/week for low usage) or detailed actual cost.
- Pension contribution relief: not claiming the extra 20-25% via Self Assessment for higher/additional-rate taxpayers. Free GBP 5,000+ left on the table by many higher earners.
- Forgetting to include taxable State Pension if drawing.
- Misreporting dividends from ISA accounts. ISA dividends are tax-free, do NOT report them on Self Assessment.
- Not retaining records for 6 years. HMRC can investigate up to 6 years back for negligence, 20 years for fraud. Keep receipts, bank statements, P60s, contracts.
Run the math for your situation
Use our GB calculator to plug in your own numbers.