There are a number of different people who need to register for Self Assessment, complete Self Assessment tax returns, and pay personal tax and National Insurance contributions on their taxable income through Self Assessment, including:
- self-employed sole traders who earn more than £1,000
- limited company directors
- company shareholders receiving more than £1,000 income from dividends
- partners (members) in general partnerships and limited liability partnerships (LLPs)
- employees claiming expenses in excess of £2,500/tax year
- any individual with an annual income over £100,000
- anyone who receives rental income above £2,500 from UK property or land
If you need to register for Self Assessment, you must do so before 5 October after the end of the relevant tax year. For example, the registration deadline for the 2023/24 tax year (6 April 2023 to 5 April 2024) is 5 October 2024.
You’ll need to file your 2023/24 Self Assessment tax return by midnight on 31 October 2024 (paper returns) or 31 January 2025 (online returns).
All Income Tax and National Insurance due for the 2023/24 tax year must be fully paid by midnight on 31 January 2025.
How much Income Tax will I have to pay through Self Assessment?
Income Tax is charged at varying rates. Every person born after 5 April 1948 with an annual income below £100,000 is entitled to a Personal tax-free Allowance of £12,570. Income above this amount will be subject to the following tax rates:
- 20% Income Tax up to £50,270
- 40% Income Tax between £50,271 and £125,140
- 45% Income Tax above £125,140
What National Insurance do I have to pay through Self Assessment?
Most people who are registered for Self Assessment will pay Class 2 and Class 4 National Insurance contributions (NICs).
The National Insurance you will pay on income earned in 2023/24 will be calculated when you complete your Self Assessment tax return for the year.
- Class 2 is charged at £3.45 per week when earnings go above the Lower Profits Threshold, which is currently £12,570
- Class 4 is charged at 9% on profits between the Lower Profits Limit (£12,570) and the Upper Profits Limit (£50,270), then 2% on profits above £50,270
National insurance should be paid through Self Assessment by midnight on 31 January after the end of the tax year. This means that your NICs for the 2023/24 tax year are due by 31 January 2025.
Self Assessment for sole traders
A sole trader is an individual person who is self employed through their own small business. As a sole trader, you must register for Self Assessment, file an annual tax return, and pay Income Tax and National Insurance on all taxable income.
This is one of the easiest types of business structures to set up and run. It is particularly beneficial for people with small businesses that generate an annual taxable income below £50,000 and/or whose line of work carries little financial risk.
Self Assessment for limited company directors
For tax purposes, a limited company director is technically an ’employee’ of the company, even if they are the owner (shareholder) of that business. Directors usually receive a salary through PAYE. Their personal tax and Class 1 NICs will be deducted at source and paid to HMRC
However, directors may also receive dividend payments, directors’ loans, benefits, and expenses – none of which are taxed through PAYE.
Directors must, therefore, register for Self Assessment if they receive any additional income that has not been taxed. Any personal tax liabilities arising from sources of additional income will be paid through Self Assessment.
Self Assessment for LLP members
LLP members are self-employed individuals who collectively run a business as a partnership.
A limited liability partnership itself is not taxed. LLP members are taxed individually on their share of business profits. It is for this reason that LLP members are required to register for Self Assessment and file Self Assessment tax returns each year.
How to register for Self Assessment
Register for Self Assessment as a self-employed sole trader or partner
If you are a sole trader or a partner in a business partnership, you can register for Self Assessment online. As part of the process, you will be required to create a Government Gateway account and password.
Your User ID will be displayed on the screen as soon as this is done. HMRC will then request information about you and your business in order to set up your online account and enrol you for the Self Assessment Online service. This will take around 10-15 minutes to complete, but it’s very straightforward.
Within a few days of submitting your registration, HMRC will post an acknowledgment letter to your business address. This will contain your Unique Taxpayer Reference. You will have to provide this number to file tax returns and pay tax.
Shortly afterward, you should receive another letter that contains your Activation Code. You must use this code within 28 days to activate your online account and file Self Assessment tax returns.
Register for Self Assessment as a limited company director
It can take a little longer to fully register for Self Assessment as a company director, but it is still relatively straightforward:
- complete form SA1 online
- within approximately 10 working days, you should receive your Unique Taxpayer Reference (UTR) in the post (this is not the same as your company UTR)
- when you receive your UTR, you can enrol online for Self Assessment services by creating a Government Gateway account and password. Your User ID will then be displayed on the screen
- an activation code will be posted to you within 10 working days
- you must activate your online account within 28 days. Simply log in with your User ID and password, then enter your activation code when requested
How do I file a Self Assessment tax return?
You can file your Self Assessment tax return online or by post on Form SA100. You can do this yourself or you can appoint an accountant to complete and file the return on your behalf. It’s relatively easy to file a return yourself if your accounts are simple and you use HMRC’s free Self Assessment online service.
Your tax and National Insurance liabilities will be worked out during the process, so you will be told how much you have to pay when you have finished the return.
If your accounts are complex and you have to complete lots of supplementary pages, you may wish to consult an accountant for advice. As long as you have registered for Self Assessment and activated your online account by the registration deadline, you can file your tax return any time after the end of the tax year.