Sorting out your self-assessment tax return for the first time can be daunting. If you want to pay your own taxes online (as opposed to nominating a tax preparer, accountant, or other tax professional to help do it for you), then you’ll need to learn a few things.
To help make filing tax returns easier, we’ll explain all the key bits of information that you need to know before you think about gathering your tax documents and filing your tax return for the current tax year.
If you’re ready to learn everything you need to know about doing your own taxes, then join us below.
Come back here later for tips on how to manage your finances better.
When you need to file your tax return
Not everybody needs to do their own taxes in the UK. If you’re employed by someone else, then taxes are usually handled before you get paid each week/monthly.
You’ll have a tax code on your wage slips, and this will indicate how much income is taxed and how much untaxed income you have.
For those that need to file their own tax returns, you’ll need to fill out a self-assessment return. How much tax you pay will depend on how much you have earned.
With the help of Auditox Accountancy we have gathered the main circumstances in which you will be required to file your own taxes through HMRC:
- Self employed income is over £1,000
- Rental income is over £2,500 (if between £1,000 and £2,500 per year, you’ll need to speak with HMRC directly for further advice)
- Untaxed income is over £2,500, for example, from tips and commission
- Savings and investment income exceeds £10,000
- You need to pay Capital Gains Tax because of shares and second home sales
- If you’re a company director (excluding non-profit organizations)
- Income is over £50,000 and you claim child benefit
- Have income from abroad or you live abroad and have a UK income
- Gross income that’s taxable exceeds £100,000
- Trustee of trust or pension scheme
- You may also have received a P800 saying you didn’t pay enough tax in the previous year
These are the most common circumstances for paying online tax via self assessment in the UK.
How to file your self-assessment tax return
Registering for self-assessment
If you’re not used to accounting and you’ve never completed a self-assessment tax return before and need to pay tax this year, then you’ll first need to register with HMRC.
Once you access the self-assessment tax return registration, you’ll be able to follow the options on screen for what applies to you (i.e., self-employed vs. not self-employed but with additional income, etc.).
Once you’ve explained your reasons for completing the tax returns, you’ll be given a unique taxpayer reference (UTR) number. This will be delivered by letter.
From there, follow the instructions in the letter to create a Government Gateway ID, where you’ll later receive another letter with an activation code. Once you receive this, you can then submit your self-assessment tax return.
All tax returns are due by January 31st for the previous tax year. Tax years run from April 6th to April 5th of the following year.
So, for the 2021/2022 tax year, you’ll need to complete the self assessment by January 31st, 2023. This will include all taxable income, tax documents, self-employment income, tax deductions, tax credits, etc. from April 6th, 2021 to April 5th, 2022.
If registering for self assessment for the first time, you’ll need to be registered by October 5th, 2022 to complete your tax return on time.
Online tax vs paper forms
You can fill out the paperwork online or with a paper tax return. If you do it via online filing using the electronic versions of the forms, the filing deadline is January 31st, as described above.
Paper tax forms will need to be posted by October 31st, 2022 in order to have the return with the HMRC on time.
Either method is fine – pick the one you find easiest – but remember the dates or else you can be fined in accordance with tax law for paying tax late and failing to get your tax return to the HMRC on time.
All the details you’ll need beforehand
Paying your own taxes is actually quite straightforward. All you need is the right tax preparation beforehand, so you have all the info you need.
After that, it’s just a simple matter of following the steps online or via the paper forms to give the HMRC all the information they need.
Here’s everything you’ll need:
- The ten-digit Unique Taxpayer Reference (UTR) number from earlier
- National insurance number
- All your untaxed income from the tax year you’re filing for, including self employment, dividends and interest on shares, commission and tips, etc.
- Any expenses relating to self-employment (so all the money you spend to do your job – you’ll need to keep track of every expense, whether it’s a repeated expense and the same expense every time, like a recurring monthly cost, or whether it’s one-off payments relating to your self employment)
- Charity or pension contributions that may be eligible for tax relief
- P60 and other records showing the tax you’ve already paid (if any)
- Internet access (if filing online)
Explaining the return
The self-assessment tax return is split into two parts. The main part deals with:
- All your income
- Pension contributions
- Charitable contributions
- Student loan repayments
You’ll simply need to follow the sections carefully and fill out the information required.
Then there’s also the supplementary pages section, which needs to be filled out depending on your tax situation:
- SA103 needs to be filled out by self-employed individuals
- SA105 by those reporting property income
- SA108 for those declaring capital gains
A note on tax preparation software
If you’re feeling overwhelmed so far, know that there are some great free tax prep software options out there that will act as a tax preparer and help with tax preparation by getting all the info you need for the tax return from the relevant tax year and putting it all in one place.
Look into this if you’re feeling nervous about filing your own taxes.
Finally, paying the tax bill
After the steps above are completed, HMRC will determine how much your tax bill is for the relevant tax year.
Payment is due by January 31st.
You can pay the tax bill via direct deposit from your bank account or by going into your bank, writing a cheque, or online or over the phone – however you prefer.
Once paid, you’re all done until the next tax year!
Completing your own taxes is quite easy, as long as you have everything you need and understand what’s required of you.
Get organized with tax preparation beforehand, file online or via paper forms on time, and pay the tax bill by the deadline and you’ll be all set!