Self Assessment is how HMRC collects income tax from individuals whose income isn’t (or can’t fully be) taxed at source through PAYE. In my role at HA & Co. Chartered Certified Accountants, I help prepare Self Assessment returns for sole traders, landlords, company directors, and higher earners. This guide covers what you need to know before the 31 January deadline.
Who Needs to File?
You must complete a Self Assessment return for 2024/25 if any of the following apply:
- You were self-employed and earned more than £1,000 (the trading allowance)
- You’re a partner in a business partnership
- You received rental income of more than £2,500 after expenses (or £10,000+ before expenses)
- Your income exceeded £100,000 from any source
- You or your partner received Child Benefit and either of you earned more than £60,000
- You received foreign income not taxed at source
- You made capital gains above the Annual Exempt Amount (£3,000 for 2024/25)
- You’re a director of a limited company
- HMRC sent you a notice to complete a return
If you’re unsure, HMRC has a self-assessment checker on gov.uk that takes about 5 minutes.
Key Deadlines
| Date | Deadline |
|---|---|
| 5 October 2025 | Register for Self Assessment (first-time filers) |
| 31 October 2025 | Paper return deadline |
| 31 January 2026 | Online return deadline AND payment of tax owed |
| 31 July 2026 | Second payment on account (if applicable) |
Missing 31 January triggers an automatic £100 penalty, even if you owe no tax. After 3 months, daily £10 penalties (up to £900) begin. After 6 months, an additional 5% of tax due is added. Interest accrues from 1 February on unpaid tax.
Don’t leave it to the last few days. HMRC’s system is slow under peak load in late January. And if your accountant is preparing it, they need your information well before the deadline.
Payments on Account
First-time filers often get caught out by this. If your last Self Assessment tax bill exceeded £1,000 and less than 80% of your tax was collected at source, HMRC requires advance payments toward the following year’s bill.
- First payment on account: 31 January (same day as your balancing payment — so potentially a very large bill)
- Second payment on account: 31 July
- Each payment = 50% of your previous year’s tax liability
Example: Your 2023/24 tax bill is £4,000. On 31 January 2025 you pay £4,000 (balancing payment) plus £2,000 (first payment on account) — £6,000 total. Then another £2,000 on 31 July 2025.
Budget for this. In your first year of Self Assessment, it can be a significant cash flow surprise.
What Income to Include
Include all taxable income from any source:
- Employment income — use your P60 (or P45 if you left a job during the year), plus any P11D benefits
- Self-employment profit — profit after allowable expenses, not turnover
- Rental income — net of allowable property expenses
- Dividends — above the £500 dividend allowance for 2024/25
- Savings interest — above your Personal Savings Allowance (£1,000 basic rate, £500 higher rate)
- Capital gains — from property, shares, crypto, business assets
- Foreign income — any income arising overseas
Allowable Expenses (Self-Employed)
Only expenses incurred “wholly and exclusively” for business purposes are deductible:
- Office costs — stationery, software, business phone proportion
- Travel — business mileage at 45p/mile (first 10,000 miles), 25p/mile after; train and flights for business trips
- Stock and materials used in your trade
- Staff costs — wages, employer NICs, pension contributions
- Marketing — advertising, website, business cards
- Professional fees — accountancy, legal costs
- Professional subscriptions relevant to your trade
- Training that updates existing skills (not acquires new ones)
Working from home? Claim £6/week flat rate without receipts, or calculate the actual business proportion of your home costs.
The Software We Use
At HA & Co. we use TaxCalc and Capium to prepare Self Assessment returns. Both:
- Calculate tax automatically once income and allowances are entered
- Apply correct rates, allowances, and reliefs
- Handle complex scenarios (pension contributions, Gift Aid, foreign income, CGT)
- Compute payments on account automatically
- File directly with HMRC via their API
For individuals filing their own returns, HMRC’s Government Gateway system is free and adequate for straightforward returns. FreeAgent is worth considering if you’re self-employed — it pre-fills most of the return from your bookkeeping records.
5 Common Mistakes
- Missing the 31 January deadline. The £100 penalty applies even with zero tax to pay.
- Under-declaring income. HMRC receives data from banks, employers, and investment platforms. If your return doesn’t match what they already know, you’ll receive an enquiry.
- Claiming non-allowable expenses. Client entertainment, commuting costs, personal clothing, and hobby expenses are not deductible.
- Forgetting payments on account. Budget for 150% of your first year’s tax bill due in January.
- Missing capital gains. Selling shares, property, investment funds, or crypto can trigger a reporting obligation even if you think the amounts are small.
The Bottom Line
Self Assessment is manageable with organised records and early action. The biggest problems come from leaving it until January with disorganised documentation. Keep a running log of all income sources and expenses throughout the year, save your bank statements and receipts digitally, and the actual return becomes straightforward.
If your situation involves foreign income, multiple properties, significant capital gains, or complex director dividends — work with an accountant. The cost is almost always less than the penalty and interest from errors.