Self Assessment in the UK

Who Needs to Complete a Tax Return?

Not everyone in the UK is required to file a Self Assessment return. Employees who pay tax through PAYE (Pay As You Earn, where tax is deducted directly from wages by an employer) often do not need to file separately. However, HMRC will send a formal notice requiring you to file a return if any of the following apply:
• You are self-employed or run your own business as a sole trader
• You are a partner in a business partnership
• Your income is above £100,000 in a tax year
• You received untaxed income, such as rental income from property
• Your taxable savings income exceeds your personal savings allowance, or your taxable dividend income exceeds the dividend allowance
• You made a capital gain above the annual exempt amount
• You claimed certain reliefs that require a return to be submitted

When HMRC issue a notice to file a return, you are legally required to submit it. Ignoring that notice is not an option without penalty consequences.

The Two Filing Deadlines

Once you are required to file a return, you have two options for how you submit it: on paper or online. The deadline differs depending on which method you use.
Paper returns
If you choose to file a paper return, it must normally be submitted by 31 October following the end of the relevant tax year. For the tax year 2023/24, which ended on 5 April 2024, the paper return deadline was 31 October 2024.
However, if HMRC issues your notice to file after 31 July, the deadline extends to three months from the date the notice was issued, if that gives you more time than the standard October date.
Online returns
The majority of taxpayers now file online, and the deadline for electronic submission is 31 January following the end of the tax year. For 2023/24, the online filing deadline was 31 January 2025.
The same three-month extension rule applies here. If HMRC issue a notice to file after 31 October, the deadline becomes three months from the date of issue, if that is later than 31 January.

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What Happens When You File Late

If you do not file your return by the relevant deadline, HMRC will charge penalties. These are applied automatically, regardless of whether you actually owe any tax. The penalty system is structured in tiers that increase the longer the return remains outstanding.

Stage 1: Initial penalty
An immediate fixed penalty of £100 applies as soon as your return is one day late. This applies even if your tax liability is nil.
Stage 2: Daily penalties
If your return is still outstanding three months after the deadline, HMRC can charge £10 per day for up to 90 days. This adds a potential further £900 to your penalty total.
Stage 3: Tax-geared penalty
If the return is six months late, HMRC add a further charge of 5% of the tax liability shown on the return. The minimum amount charged at this stage is £300, even if 5% of your liability would produce a smaller figure.
If the return is twelve months late, HMRC can charge a second tax-geared penalty. In most cases this is another 5% of the tax liability, again with a minimum of £300. Where HMRC believe a taxpayer has deliberately withheld information, this second charge can rise to 100% of the tax liability.

How HMRC Enquires Into Your Return

Once you have submitted a return, HMRC have a window of time within which they can open a formal enquiry. An enquiry is an official investigation into the accuracy of your return. HMRC do not need a specific reason to open one; they can select returns for enquiry on a random basis or because something on the return has flagged a concern.
The window for HMRC to open an enquiry depends on when the return was actually filed:

• If the return was filed on time, HMRC must give notice of their intention to enquire within twelve months of the filing deadline.
• If the return was filed late, the window extends. HMRC must give notice by the end of the calendar quarter following the first anniversary of the actual filing date. A calendar quarter ends on 31 January, 30 April, 31 July, or 31 October.

Closure Notices and Your Right to Appeal

An HMRC enquiry does not last indefinitely. When HMRC have finished their review, they issue a closure notice setting out their conclusions and any amendments to the return they consider necessary.
In more complex cases, HMRC can issue a partial closure notice to resolve specific issues within an enquiry before the full investigation is complete. This allows some matters to be concluded earlier, including any tax that becomes payable in respect of those matters.
If you disagree with amendments included in a closure notice, you have 30 days to appeal. Appeals are handled through HMRC’s internal review process in the first instance, and if that does not resolve the matter, through the independent Tax Tribunal system.
One important protection: HMRC can only open an enquiry into a tax return once. If they issue a closure notice and later feel their enquiry was not wide enough, they cannot simply reopen the same return for a further enquiry. Separate rules apply for situations where HMRC discover new information that was not reasonably available at the time of the original enquiry.

How Tax Is Calculated After Filing

If you file your return online, HMRC’s software will automatically calculate your tax liability based on the figures you have entered. You do not need to perform the calculation yourself.
If you file a paper return and submit it by 31 October (or two months from the date of issue if that is later), HMRC will calculate your tax on your behalf.
If you submit a paper return after that point, you are responsible for calculating your own liability using the Tax Calculation Summary pages included with the return.
In all cases, you declare that the return is correct and complete to the best of your knowledge and belief. This declaration is significant. If the return turns out to be inaccurate, that declaration is part of what HMRC use to determine whether errors were careless or deliberate.

Practical Steps to Stay on the Right Side of HMRC

• Register for Self Assessment as soon as you have income that requires it. HMRC need to be notified within six months of the end of the relevant tax year.
• Keep records of all income and expenses throughout the year. Do not rely on memory or bank statements alone.
• Know your deadline and file early. Filing late, even by one day, triggers an automatic £100 penalty.
• If you receive a notice to file from HMRC, act on it. The deadline clock starts from the date on that notice.
• Use a qualified tax adviser if your affairs are anything other than straightforward. The cost of advice is almost always less than the cost of penalties.