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.
I have a UK Limited company but I’m not resident and I don’t have any of the UK countries nationalities. Shall I register for the self-assessment as a company director? noting that I’m not registered on Paye as I don’t give myself a salary from the company.
Thank you for your kind enquiry, Osman.
Company directors need to register for Self Assessment if they are in receipt of any taxable income – even if it is not via PAYE. If you do not receive any income, you will not need to register for Self Assessment.
We trust this information is of use to you.
Kind regards,
The 1st Formations Team
Good Afternoon,
I hope you’re well.
I have worked as self-employed in 2015 (November (1day), December (1day) ) and 2016 (January (1day), February (1day), and March (1day)) and I have earned a total of £700 for that tax year.
My question is:
I thought that my income was too low in order to register (as self-employed) and declare my income.
Did I do it right? If not, How do I declare this income?
Best Regards,
Jr
Thank you for your kind enquiry.
The rules relating to registering for Self Assessment are that you must report any untaxed income over £2,500 via a Self Assessment tax return. For income amounts lower than this figure, you may not have to complete a tax return, but you are legally required to report such income by contacting HMRC. You can find contact details for reporting income to HMRC here: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees
I trust this information is of use to you.
Kind regards,
The 1st Formations Team
Will I get fined for that?
Thank you for your help with this matter. I really appreciate it.
Best Regards,
JR
Hi JR,
There is no automatic fine or penalty for failing to register for Self Assessment. However, once registered, if you fail to send your return in on time and have not been granted an extension, penalties can range from £100 up to 100% of your tax bill. You must all make any payments on account to HMRC by 31 January of each year, and if you do not do so, HMRC will charge you interest on late payments.
Should you require any further clarification, please leave a follow up comment.
Regards,
The 1st Formations Team
Hi, I have been working abroad (China & Myanmar) for the last few years, working for local Chinese and Burmese companies and paying tax in those countries. The only UK income was from interest on UK savings, dividends on UK shares and the rental of my UK home.
For my UK self assessment, I assume I don’t need to complete the sections – Employment; Self Employment; Partnership; Foreign; Trusts; Capital Gains?
For the section on Residence, to the question “Were you, for all of the year 5 April 2020, one or more of the following: not resident; not domiciled; dual resident” I assume I should answer “no”?
Therefore, the only sections I need to complete are Personal Details; Income from Interest & Dividends and UK Property?
Your confirmation would be appreciated.
Thanks a lot
Thank you for your kind enquiry, Mark.
Based on the statements you have made in relation to working abroad in China and Myanmar, we can confirm that your assumptions regarding how to complete the sections of the Self Assessment form you have highlighted are correct, and these are the answers you should input.
I trust this information is of use to you.
Regards,
John
Hello,
I’m employed full time and pay tax through PAYE but have been given the opportunity to do work on freelance basis over and above my day job. This is on a fairly casual basis, so I’m a little confused as to what I need to do in terms of registering to pay the additional tax. If you could clarify, I’d really appreciate the assistance! Thanks, Jane.
Dear Sir,
Thank you for your message.
We are not accountants so cannot give specific advice however it would seem necessary to register with HMRC for Self-Assessment and in the Annual Personal Tax Return, you would declare your freelance income and the income from PAYE.
Best regards,
1st Formations Team.
I set up a Partnership in August 2015. I’m about to register with HMRC and file a tax return, it says you have to register by October 5th in the second tax year, does that mean I should have done it last year or am I still within the timelines?
Thanks
Mike
Dear Mike,
You should have registered the partnership last year however you are likely still within the deadlines to file the first partnership tax return. Please remember you and the other partners will also need to be registered for Self-Assessment.
Best regards,
1st Formations Team
Hi,
How will I be able to know that my business is already enrolled for ‘Self-Assessment tax return’ using my UTR and activation code?
Dear Pradipta,
You should be able to access your personal data on your HMRC account if you have registered to file information online. The online account will tell you which taxes you are already registered for and which taxes are available for you to register for online. IF you are having trouble with the online service there is a specific HMRC Helpline 0300 200 3600
Best regards,
1st Formations Team
Great page!
I have become self employed and registered in November 2016, do I need to complete a tax return for 2015-2016 year? Or do I not have to worry until January 2018?
Thanks
Dear Lianne,
You only need to complete an Income Tax Return for the year when you have become self-employed. The Tax year runs from 6 April -5 April the following year so you would only need to file the Income Tax Return for 2016-17 by 31 January 2018.
Best regards,
Rapid Formations Team
Hi, I’m registered as a sole trader and have completed self assessments for a number of years on a small business. I’ve also been employed by a company and paid taxes through PAYE. In the tax year, 2016-17, I became self employed in my full time job as well and I’m contracted out each day. Do I have to register with HMRC again or complete all my earnings under the same UTR, even though they are different jobs?
Dear Sir
We are not accountants so cannot advise specifically on your personal taxation requirements so we would suggest you seek the advice of an accountant.
Best regards,
1st Formations Team
Hi,
Thank you for this helpful information.
I am mechanic and will start working as self employed for different garages.
Should I register for VAT and charge VAT for my services?
Should I register for PAYE since I am the only employee of my company?
Regards,
Nelson
Dear Nelson,
Thank you for your message.
We cannot advise as to whether you need to register for PAYE or Vat as your circumstances will dictate what is necessary/best for you. For Vat purposes you have to register for Vat if your turnover will be greater than £83,000 in the 12 months following registration. It may however be beneficial to register even if your turnover is below the threshold but you would need to speak to an accountant about this. PAYE on the other hand is not mandatory as there are other ways to pay yourself (ie paying a salary less than PAYE threshold and any further payment could be made in dividends if your company meets the qualifying criteria), but again you would need to discuss this with an accountant to work out what would be best for you.
Kind Regards
1st Formations Team
Hello,
Thanks you for this really useful information
I’ve recently started workings as self employed and registered for self assessment and VAT.
Should I also register for PAYE since I am the only employee of the company?
Best regards,
Nelson
Dear Nelson,
Thank you for your message.
We cannot advise as to whether you should register for PAYE as your circumstances will dictate what is necessary/best for you. PAYE is not mandatory as there are other ways to pay yourself (ie paying a salary less than PAYE threshold and any further payment could be made in dividends if your company meets the qualifying criteria), but you would need to discuss this with an accountant to work out what would be best for you.
Kind Regards,
1st Formations Team.
Since my last tax return, I have become a company director of a small Ltd company, receiving a small PAYE salary. I am also a sole trader (and have been for a few years) and am registered for self assessment. I do not earn enough overall to pay any tax (I am also a full time parent). Do I need to register differently for self assessment now that I am a company director?
Many thanks.
Dear Lisa,
We are not able to provide taxation advice of this nature and would suggest you contact an accountant to access the correct advice for your situation.
I do however enclose a link from the gov.uk website which may be of some assistance to you https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return
Best regards,
1st Formations Team
This was really helpful, thanks, I have a question, I officially started working as a sole trader on 3rd October and registered today, so I obviously haven’t learnt any money yet, do I still need to file a tax return form? As there is no information here if you register posy 5th October. Also if you register as a sole trader with HMRC, does this mean you have also automatically become VAT registered or do you do this a different way afterwards (This is not something i need to do, I just want to understand the process). I would really appreciate a little help on these things.
Hello,
If you register on October 3rd, you are trading in the 2016-17 tax year, which runs from April 6th 2016 to April 5th 2017. Your first tax return will not be due until 31st January 2018, so you have plenty of time! Your tax for the current 2016-17 tax year is also due by 31st January 2018.
You are not automatically registered for VAT, no – you must do this separately.
Best wishes and good luck with the new business!
Rachel
I am setting up a small LLP who wished to trade in the UK market, both to retailers and online.
I have started the process to become volunteraly VAT registered and register for Self-Assessment, however myself and my business partner are currently in full-time employment and pay tax via PAYE.
How will these two methods of tax interlink? Will I continue paying tax via PAYE for my day job, and only pay Self-Assessment tax on my new business profits?
Thanks.
Hi Lewis,
Yes, that’s right – you will continue to pay Income Tax and National Insurance through PAYE on the wages received from your full-time job, and you will be required to report and pay tax and NI on any additional income generated through the LLP.
You will not be taxed twice. However, your total annual earnings (from full time employment and your LLP) must be added together to determine how much additional tax and National Insurance you need to pay through Self-Assessment, e.g. if your total annual income exceeds the basic threshold for Income Tax, you will pay the higher rate of tax (40%) on anything above the basic rate threshold. There is a section in the Self-Assessment tax return that allows you to state your additional income from employment.
I hope this clarifies matters. You may very well be able to complete your own tax return, but start it in good time in case it’s too confusing and requires the help of an accountant.
Best wishes and good luck with the new business!
Rachel