What is Self-Assessment?
Self-assessment is the UK system used by individuals to report their income and pay income tax directly to HMRC. Freelancers, sole traders, and anyone with untaxed income must file a self-assessment tax return each year.
Self-assessment is HMRC's system for collecting income tax from people whose tax is not fully deducted at source (e.g., through PAYE). As a freelancer or sole trader, you are responsible for calculating and paying your own tax through self-assessment.
You need to file a self-assessment tax return if you:
- Are self-employed and earn more than £1,000
- Earn untaxed income (e.g., rental income, investment income)
- Are a partner in a business partnership
- Have an annual income over £150,000
- Need to pay the High Income Child Benefit Charge
Key self-assessment deadlines for the tax year (6 April to 5 April):
- 5 October: Register for self-assessment if you are newly self-employed
- 31 October: Deadline for paper tax returns
- 31 January: Deadline for online tax returns AND payment of tax owed
- 31 July: Second payment on account (if applicable)
When you register for self-assessment, HMRC issues you a Unique Taxpayer Reference (UTR). You will need this for all correspondence with HMRC.
Your tax bill is calculated on your total income minus allowable expenses and your personal allowance (£12,570). Keeping accurate invoicing and expense records throughout the year makes filing significantly easier.
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Frequently Asked Questions
When do I need to register for self-assessment?
You must register by 5 October following the end of the tax year in which you became self-employed. For example, if you started freelancing in June 2025, you must register by 5 October 2025.
What happens if I miss the self-assessment deadline?
You will receive an automatic £100 penalty for filing late, even if you owe no tax. After three months, daily penalties of £10 per day (up to 90 days) apply. After six months, an additional 5% of tax owed is charged, with a further 5% at 12 months.
Can I file my self-assessment tax return myself?
Yes. Many freelancers file their own returns using HMRC's online portal. If your finances are straightforward, it is manageable. For complex situations involving multiple income streams or VAT, an accountant can save you time and potentially money.
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