12 Jan 2018 1:19 PM

As tax specialists at Alliotts my colleagues and I are often asked about Self Assessment, as the UK tax system can sometimes be confusing. So here I’ve listed the most popular FAQs to clarify how Self Assessment works and to help you avoid the common pitfalls when completing and filing your tax return.

What is Self Assessment?

Self Assessment is the regime by which the taxpayer assesses and pays direct tax in the UK. At present, around 30M people in the UK pay tax, of which 10M prepare income tax returns under the self-assessment system.

The UK tax system is administered by the Central Government; the Department of the Treasury is responsible for the collection and imposition of taxes (also known as the Exchequer), and the head of this department is Chancellor of the Exchequer, currently Philip Hammond.

The administration of taxes is in the hands of The Commissioners for Her Majesty's Revenue and Customs (HMRC), who appoint civil servants to undertake the administration work.

Who needs to complete a Tax Return?

Individuals with any of the following income during a tax year must submit a tax return:

  • You are a director of a company, and receive any income other than from PAYE.
  • You have received income from land or property in the UK
  • Your annual income exceeds £100,000
  • You receive £10,000 or more from taxed savings and investments including dividends.
  • You receive £2,500 or more untaxed income.
  • Your income is over £50,000 and you or your partner have received Child Benefit payments
  • You have made profits from selling capital assets such as shares, a second home etc and are chargeable to Capital Gains Tax.
  • You are a non-UK resident and have untaxed income arising in the UK.
  • You have received taxable foreign income in excess of £300 a year. The Channel Islands and the Isle of Man are classed as foreign.
  • You have received income from a trust or deceased’s estate.


When do I need to notify HMRC?

If you need to complete a self assessment tax return, i.e. if you become chargeable to income tax or capital gains tax for the first time, it is your duty to notify HMRC within 6 months of the end of the tax year for the year you became chargeable i.e. by 5 October following the tax year. 

If you fail to meet the notification deadline, HMRC will charge a penalty. The penalty will be based on the behaviour of the person concerned and is a percentage of the ‘potential lost revenue’.

There is more on the impact of ‘taxpayer’s behaviour’ in ‘How much are the late notification and filing penalties?’

Can I claim tax relief and allowances on my tax returns?

Yes, if you are a higher rate taxpayer and contribute to a registered personal pension scheme or donate to charity via gift aid payments, you can claim tax reliefs within the tax return. 

The election for the Marriage Allowance and Marriage Couple Allowance are also made on the return. 

You can also make other claims for relief, for example, allowable deductible payments, ‘tax reducers’ claims such as tax efficient investment relief.

 What are the filing deadlines for Self Assessment?

There are two separate dates for filing a return, depending on whether the taxpayer is filing a paper return or an electronic / online return.

  • Where the taxpayer completes a paper return, the tax return should normally be filed no later than 31 October following the end of the tax year.
  • Where a taxpayer completes an online return, the return should normally be filed no later than 31 January following the tax year.

Where a taxpayer has tax deducted at source via the PAYE system, underpayments of tax of less than £3,000 can be collected via PAYE rather than a one-off payment. In order for this treatment to apply, if the taxpayer is filing an online return, the tax return must be filed by the earlier deadline of 30 December following the end of the tax year.

The filing deadline is extended only if there is a delay by HMRC in issuing the notice of tax return. Under such circumstances, the filling deadline is whichever date is later, the standard filing time, or three months after the issue of notice of tax return.

What penalties could I face if I miss the tax filing deadline?

If you miss the deadline, HMRC will levy an initial penalty of £100 on the first day of late return, even where there is no tax to pay. Additional daily penalties of £10 per day may be levied in respect of returns, which are more than 3 months late. 

The daily penalty can be imposed for a maximum of 90 days.

If a return is more than 6 months late, there will be an additional penalty of 5% of any liability to tax, which would have been shown in the return or £300 if greater.

An additional penalty of 5% of any liability to tax (or £300 if greater) will also be levied if the return is more than 12 months late. Further penalties will depend on the taxpayer’s behaviour.

What if I make an error on my tax return and how can I fix it?

It is the taxpayer’s duty to inform HMRC about any errors in their tax return. You are allowed to amend your submitted tax return within 12 months of the due date for filing, and for earlier years in writing. HMRC will charge interest and penalties for mistakes on your tax return, depending on the nature of errors and taxpayers behaviour. Incorrect tax penalties are based on the amount of tax you owe, and are payable in addition to the tax owed.

HMRC have the right to amend the taxpayer's return within nine months of the date of receipt. HMRC will usually do this to eliminate or to reverse any obvious errors or mistakes within the return. These are usually arithmetical errors although HMRC can reverse any technical mistakes made by the taxpayer in completing the return. HMRC will notify the taxpayer of any amendments made.

What if I miss the amendment date and I realised that I have overpaid?

Where the 12 months deadline for a taxpayer to amend a return has passed, a claim can be made in certain circumstances (for example, under-claimed expenses or missed a relief claim) to recover tax overpaid as a result of a mistake. The claim must be made within 4 years of the end of the relevant tax year, so if a taxpayer has made a mistake in the tax return for 2016/17 a claim for relief must be made by 5 April 2021.

Do I need to maintain records of my transactions and for how long?

Taxpayers are required to retain records of income and capital gains for at least 22 months after the end of the tax year to which they relate i.e. the first anniversary of 31 January following the end of the tax year.

Self-employed taxpayers, or individuals having income from property, must retain records for at least five years and ten months after the end of the tax year to which they relate i.e. the fifth anniversary of 31 January following the end of the tax year.

Penalties may be charged for failure to retain proper records. The maximum penalty is £3,000 for each failure to maintain records sufficient to support entries on the return. It is sensible to retain full and proper records and can help avoid interest payments and penalties.

How much are the late notification and filing penalties?

Penalties are applicable where a tax return or claim for a relief contains an inaccuracy, which leads to an understatement of tax; or a false or inflated statement of a loss; or a false or inflated claim to a tax repayment. The ‘taxpayer behaviour’ impacts on the level of the penalty that is applied to errors or failures.

The penalties will apply to the lost revenue as result of understatement or undisclosed income.

Taxpayer behaviour

Minimum Penalties

Minimum penalties with unprompted disclosures

Minimum penalties with prompted disclosures

Deliberate and concealed




Deliberate but not concealed




Careless mistakes




Disclosure is unprompted if the taxpayer has no reason to believe HMRC have discovered or are about to discover the failure/error.

Disclosure takes place where a taxpayer tells HMRC about the failure, gives HMRC reasonable help in calculating the resulting unpaid tax and allows HMRC access to records to check the amount of unpaid tax

Alliotts tax specialists provide a full range of advice on tax planning and compliance on all tax matters to individuals based in the UK and overseas including income tax, inheritance tax, trust, estate, capital gain tax, VAT and corporation tax. As members of Alliott Group, an international alliance of accountants and lawyers represented in 70 countries we have access to local advice in key commercial centres worldwide, which is invaluable to many of our international clients.

If you would like advice on completing and filing your Self Assessment Tax Return please contact us for further advice.