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The Self Assessment Tax Return for Beginners

No one likes tax season, but this guide will help you fill out your Self Assessment tax return properly for the first time.

5 min read

First time Self Assessment – survivors tell all

Your first time can be daunting. How are you meant to know what you’re doing? What if you make a mistake?

We’re talking about filing your taxes, of course. More than 10 million tax returns are submitted to HM Revenue and Customs (HMRC) each year. But nearly one in five (19%) of those who have filed a self-assessment in the past two years think they may have lost out financially because they made an error or didn’t understand the document.

That’s a scary statistic for first timers. But remember, all your self-employed friends have been there, and they all got through it – each with their own story to tell.

How to do a Self Assessment tax return for the first time

If you’re self-employed, you’ve probably already started receiving emails from HMRC reminding you to fill out your Self Assessment tax return before the online deadline of 31 January. 

But what is a Self Assessment tax return? And how do you properly complete it for the first time? Luckily, it can easily be done online in a series of simple steps. And don’t worry if you’re struggling during your first time - the process can seem daunting even to those who do it every year.

In this blog post, we’ll answer all the basic questions you might have about completing your Self Assessment tax return for the first time, and recommend some services to help you out.

What is a Self Assessment tax return?

A Self Assessment tax return is one of the ways HMRC works out how much taxpayers owe. While tax paid on employees’ wages is sorted by Pay As You Earn (PAYE), the self-employed and those receiving other sources of income must use Self Assessment. 

In the simplest terms, Self Assessment means what it says: you assess your earnings and expenses yourself before sending what you owe directly to HMRC.

In the simplest terms, it means what it says: you assess your earnings and expenses yourself before sending what you owe directly to HMRC. 

Let’s get into it.

How to do a Self Assessment tax return

The process of doing a Self Assessment tax return can seem convoluted, but it’s quite straightforward if you break it down into steps.

1. Register 

You must register with HMRC for Self Assessment by 5 October in your business’s second tax year. To do so, go to the gov.uk page and fill out the form. 

Once you’ve done that, you’ll get your Government Gateway user ID, which you can use to set up your tax account and manage your affairs going forwards. You’ll also get a Unique Taxpayer Reference (UTR) and an activation code.

2. File your return

Once you’ve accessed your account, the next step is to log in and file your return. This will mean reporting all your income and expenses and calculating how much tax you owe, which you can easily do with the help of our Self Assessment calculator

It’s worth checking guidelines on what’s taxable and what isn’t, as you can save on your bill by writing off things like stock, insurance and costs for your premises - including a portion of your home costs (like electricity or heating) if you work from home. 

At the same time, you should remember that some forms of income support for the self-employed are taxable.

3.  Pay

Once you’ve submitted your return, you’ll be told how much tax and National Insurance you need to pay. It’s worth making sure these add up, and keeping good records throughout the year can help with this. 

When it comes time to pay, you can do this through a range of methods, including by debit or corporate credit card, through a bank transfer or in person at your bank (coronavirus permitting). 

4. Deadlines

Remember to keep a close eye on the deadlines. These are:

  • 31 January of the next year for online returns 

  • 31 October of the current year for hard copies 

So for the tax year 2019-20, you would need to have submitted your physical return by 31 October 2020, or you will need to submit your online return by 31 January 2021. 

It is crucial that you meet these deadlines. HMRC charges a penalty fee of £100 for returns submitted up to three months late, and that can increase a lot if you leave it any later. See details of deadlines and penalties in the relevant subsection here.

Do I need to do a Self-Assessment tax return?

You need to do a Self Assessment tax return if you:

  • Are self-employed

  • Run a small business

  • Are a registered sole trader

  • Earned more than £1,000 in a given tax year in your capacity as a corporate partner

If you are the director of a limited company, you may need to file a Self Assessment, dependent on how you receive your income and whether you are already taxed through PAYE. 

You may also need to do a Self Assessment tax return if you have untaxed income from the following sources: 

  • Renting out a property 

  • Tips and commission

  • Savings, investment and dividends

  • Foreign income 

If working all this stuff out sounds complicated, or even like a poor use of your time, we provide Self Assessment services to help everything run smoothly, with features that let you scan bills and receipts, automatically import transactions from your bank and keep all your important information in one place.

We hope this blog post has answered your questions about first time Self Assessment tax returns. As with everything related to running a business, it’s crucial you keep thorough records and stay on top of changes. HMRC is already moving away from paper returns with its Making Tax Digital programme, for instance. Stay in the loop about changes to make sure you don’t get caught out.

Feel you’re better informed about first time Self Assessment tax returns? The QuickBooks blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow. Stay compliant with QuickBooks