What does Self Assessment involve, and who pays it?

Traditional employees have income tax deducted before they get paid by their employer.

The Self Assessment system is in place to collect income tax from individuals who have earnings which aren’t taxed at source, including limited company directors.

The ‘self employed’ (sole traders) also need to complete tax returns, as do some pensioners, landlords, and those with foreign income, depending on their circumstances.

Who needs to submit a tax return?

It may seem a little bit unclear at first who must sign up for and pay tax via a Self Assessment Tax Return (SATR), but it’s quite simple.

Self-employed and untaxed income earners

If you were self-employed during the 2025–26 tax year, you’ll need to sign up.

The same applies to those who received over £2,500 in untaxed income, which could include rental income from a property or tips in a restaurant.

And if you received under £2,500, it’s a good idea to contact HMRC to check your status.

Note: If you’re in a partnership, each partner must also file a separate SATR.

High savings, investment or capital gains income

If you have a large savings pot or investment portfolio and your income was higher than £10,000 before tax, you’ll also need to register.

People with dividends from shares above £10,000 before tax must also sign up, as must those who profited from selling homes, shares or certain other assets (capital gains).

If your capital gains exceed the Annual Exempt Amount (£3,000 for 2025–26), you are legally required to report and may need to pay Capital Gains Tax.

High earners in employment

It’s also worth noting that those who were employed by an organisation but received a taxable income of above £100,000 in total must also sign up for self-assessment, even if they have already been taxed at source.

This is partly because their Personal Allowance is tapered and could be reduced to £0, increasing their tax liability.

Put simply, if your income wasn’t fully taxed through PAYE, you may need to file a return.

Contact your accountant or HMRC if you’re unsure about this requirement.

Most limited company directors must file too

Finally, and most relevant to readers of this site, if you’re a company director, you need to report and pay tax on any untaxed sources of income too.

Even if you take a minimal salary and dividends below the higher-rate threshold, HMRC still requires a full declaration of all income sources as a director.

If your only source of income is a salary, you probably don’t need to submit a tax return.

If you’re unsure, you can use the handy online tool on the Gov.UK website, which will determine whether you need to submit a SATR.

What are the deadlines?

When it comes to your Self Assessment tax return, there are a number of crucial deadlines you must meet in order to avoid a fine.

Understanding the tax year

Tax years operate differently from calendar years.

The current tax year began on 6th April 2025 and ends on 5th April 2026, and if you earn any untaxed income during this period, you will need to settle your tax liability via Self Assessment.

This timing affects how you report income, claim reliefs, and plan tax-saving strategies (e.g., pension contributions or dividend declarations).

Key registration and filing dates

If you’re registered as self-employed or have to send a tax return for any reason, you need to register by 5th October 2026. This process can take a few days, so it’s wise to do it well in advance.

Any tax returns filled out on paper and posted to HMRC need to be received by midnight on 31st October 2026, while any online tax returns need to be submitted by 31st January 2027.

This is also the date by which you need to settle the bill and pay your tax.

You may also need to make a ‘payment on account’—an advance payment for the next tax year—if your tax bill is over £1,000 and less than 80% of your tax is collected at source. Find out more in our guide to payments on account.

Missing these deadlines can result in penalties; therefore, be sure to mark them in your calendar.

How to register

You can register online via the Government Gateway. However, before you can submit your numbers for the tax year in question, you must have already received a Unique Taxpayer Reference (UTR).

Given that the deadline for submitting your SATR is 31st January each tax year, you are strongly advised not to leave signing up for the online service until the last minute, as it may take a week or two for your UTR to be sent to your home address.

Once registered, you should also activate two-factor authentication for added security on your HMRC online account.

You’ll also need to set up a Government Gateway account if you don’t already have one.

Using an accountant to submit your tax return

If the type of income you received during the tax year is fairly simple (just salary and dividends, perhaps), you may find HMRC’s online submission tool simple enough.

But if you have received income from multiple sources or have complex tax arrangements, you may prefer to outsource the submission to an accountant.

Why you might want professional help

Most limited company accountants will file your personal tax return for a one-off fee (typically between £100 and £200, plus VAT).

This may provide peace of mind that your tax calculations are correct, and minimise the chance of your return being challenged.

Bear in mind, however, that you cannot reclaim the cost of submitting your personal tax return against your limited company’s tax bill, as it is not a legitimate business expense.

Choosing to use a qualified accountant can also help ensure you claim all the reliefs and allowances you’re entitled to.

Examples include pension contributions, charitable donations (via Gift Aid), and allowable business expenses if you’re self-employed.

Useful tips to remain stress-free

The best thing you can do to avoid stress at tax return time is to plan in advance and submit your SATR as early as possible (ideally before the 31st January deadline).

That way, you won’t be left panicking when the deadline is looming, when you should be concentrating on running your company.

Penalties for late filing or payment

You’ll be liable for a £100 penalty if your SATR is submitted up to 3 months late, and you will be charged interest if you also owe income tax. These penalties become increasingly severe over time.

If your return is more than 6 months late, an additional £300 or 5% of the tax due (whichever is higher) will be charged.

Keep your records organised year-round

It is also a good idea to keep all of your tax records in a safe place for obvious reasons – including details of your salary (payslips, P60), dividend vouchers, bank and investment statements, and details of any benefits you received during the tax year – including child benefit.

Digital record-keeping tools or apps, such as the excellent FreeAgent and Xero, can help streamline this process and prepare for Making Tax Digital (MTD) requirements.

The more organised you are throughout the year, the easier filing will be.