Self-Assessment – what is it and should you be filing a tax return

The 2021/22 tax year ended on 5 April 2022 and taxpayers within the Self-Assessment system will have recently received a ‘notice to file’ letter from HMRC.   

Income Tax and National Insurance is usually deducted automatically from wages, pensions and savings. However, individuals with untaxed income or capital disposals must complete a tax return. Self-Assessment is a system used by HMRC to collect Income Tax, Capital Gains Tax and Classes 2 and 4 National Insurance Contributions and are also used to allow taxpayers to claim additional tax relief, i.e. relief on personal pension contributions or tax effective investments.

Criteria for Self-Assessment: 

• You are self-employed as a ‘sole trader’ and have gross earnings exceed £1,000; 
• You are a partner in a business partnership; 
• You or your partner received child benefit and either of you had an annual income of more than £50,000; 
• You receive foreign income, rental income or annual income from a trust/settlement; 
• Your total annual income exceeds £100,000; 
• You have Capital Gains exceeding £12,300; or 
• You receive any other untaxed income.

How do I register for a 2021/22 tax return? 

Individuals not already within the self-assessment system but who require completing a tax return for the 2021/22 tax year must register with HMRC by 5th October 2022. Where registration is not completed by 5th October 2022 HMRC may issue a ‘Failure to notify’ penalty.

Read also: Can You Claim VAT Back as a Sole Trader?

When do I need to file my tax return?

The submission deadline for the 2021/22 tax returns is 31 October 2022 for a paper submission or 31st January 2023 where the return is submitted electronically, but it can be completed any time after 6th April 2022. We would always recommend early completion to give pre warning of any tax liability due ahead of the payment date of 31 January 2023 and to secure early closure of HMRC’s enquiry window.

Individuals who have a tax liability for the 2021/22 tax year of £3,000 or less can opt to have the liability collected via their PAYE tax coding notice for the 2023/24 tax year, to benefit from this the tax return must be submitted on or before 30th December 2022.

Read also: Can You Claim VAT Back as a Sole Trader?

I no longer meet criteria for Self-Assessment but HMRC have issued a notice to file

If you have received a notice to file, and you do not meet the above criteria and you do not owe any tax liability, a request can be made for the tax return to be withdrawn. If HMRC agrees that you no longer require to file a tax return, then they will formally write to you confirming their agreement to remove you from the Self-Assessment system.

Summary of Key Dates and Deadlines 

Self-Assessment Deadlines
Registration for Self Assessment for 2021/22	By 5 October 2022
Submission of paper tax return	By 31 October 2022
Tax to be collected via tax code submission online	By 30 December 2022
Submission of online tax return	By 31 January 2023
Balancing tax payment for 2021/22	By 31 January 2023

If you would like any further information on or would like any advice or help with completing your Self-Assessment Tax Return, then please get in touch with Carol Edwards or your usual AAB contact.

Find out more about our Private Client Tax team.