Everything you need to know about Self Assessment Tax Returns
HMRC Self Assessment Tax Returns are one of the ways the taxman works out how much UK taxpayers owe. Even if your income's already taxed by PAYE, you might still have to file a UK tax return to declare any other income or claim a tax rebate. When you file a Self Assessment tax return online, you're telling HMRC what income you have and how much you're spending to stay in business. Self Assessment returns are designed to be as simple as possible, but it's very easy (and often expensive) to get them wrong. Most people choose to handle their Self Assessment online, but it's possible to do it on paper if necessary.
HMRC Self Assessment tax returns are very different from the Pay As You Earn (PAYE) system most people use. Under PAYE, tax is deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a Self Assessment tax return, even if you already pay tax on any income you get from an employer under PAYE.
Self-employed tax returns mean keeping business records if you're self-employed, so be sure to keep them handy when the time to file comes. You'll also need to consider things like payments on account each year. These involve paying 6 months' worth of tax in advance on the 31st of January and 31st of July each year. It's also worth understanding what you can claim on your expenses when you do your tax return. HMRC will use the information you give them to calculate how much you owe. If you're self-employed, a Self Assessment tax return is the main way to sort out your allowances.