Do I need to complete a tax return?
5 min | 18 December 2023
If you have a regular salary from one employer only you probably don't need to file a tax return. But if you earn over £100,000, or have other sources of income such as freelance work or renting out a room, or if you have any investments or capital gains, here's what you need to know.
Taxes probably aren't something you spend much time thinking about. For many of us, our income from employment is ‘taxed at source’ – meaning income tax is taken out of your pay before you receive it. Look for ‘PAYE’ which stands for 'pay as you earn' or 'income tax' on your payslip.
But what about tax returns? If you need to file one depends on several things. A good place to start is by completing HMRC’s online questionnaire
Each tax year starts on 6 April, and ends on 5 April the following year. Here are some examples that could mean you need to complete a self-assessment tax return for this tax year:
- You’re self-employed and have earned more than £1,000
- You have multiple sources of untaxed income (such as a side business or money from renting a room or property) that add up to more than £2,500
- You’ve received any untaxed income of more than £2,500
- You earn more than £100,000 a year in taxable income
But it's not just your income that might mean you need to complete a tax return – these factors could impact you too:
- If you or your partner are claiming Child Benefit and either of you have an income above £50,000
- If your State Pension is your only source of income but amounts to more than your personal allowance (which is currently £12,570)
- If you need to pay Capital Gains Tax or claim capital losses on profits from selling assets such as shares or a second home
- If you’re self-employed and earn less than £1,000, but you want to pay Class 2 National Insurance Contributions voluntarily to protect your entitlement to State Pension and certain benefits
- If you have income from abroad or you live abroad but have an income in the UK
- If you work as an 'off-payroll worker'
You’re an off-payroll worker (also referred to as a contractor) if you provide services to a client through an intermediary such as:
- your own limited company
- a partnership
- a personal service company
- an individual
You must file a tax return
- If you receive interest from banks and building societies of more than £10,000
- If you receive dividends of more than £10,000
If you had untaxed income you must tell HMRC if you had
- more than £2,000 income from share dividends
- between £1,000 and £2,500 in any other untaxed income, such as commission or money from renting out a property
What to do if you need to complete a tax return
The first thing you should do is register for self-assessment with HMRC. Once registered, you’ll receive your Unique Taxpayer Reference number, which you'll need to include when you complete your form. If you've registered before, you don't need to register again.
HMRC must receive your tax return by the below deadlines following the end of the income tax year to 5 April:
- If you’re doing a paper tax return you must submit it by midnight on 31 October
- If you’re doing an online tax return you must submit it by midnight on 31 January
If you register for self-assessment but discover you don’t need to complete a tax return after all, you must contact HMRC before 31 January and let them know, to avoid any penalties.
How to make tax returns easier
There are some things you could do to make completing your tax return a bit easier – especially if you’re doing it without the help of an accountant:
- If you're filing a tax return for the first time, register for self-assessment as soon as possible
- Decide whether you’ll complete the form online or on paper. Online submissions give you a few more months to submit. They're easier to edit and you'll know sooner whether or not you owe any taxes
- Keep a log of your income and expenses throughout the year. You could use a spreadsheet, app or tax-specific software to record your transactions and receipts. This should help you to calculate your taxable income and claim any deductions or reliefs you’re entitled to
- Gather the documents or information you'll need to complete your tax return, which could include your P60, P45, bank interest income statements, dividend vouchers, rental income and expenses, capital gains and losses, pension contributions or charitable donations (including Gift Aid)
- If you want HMRC to use your tax code to collect any tax you owe (up to £3,000) through your wages or pension, you must file your tax return online by 30 December 2023
Depending on your situation, you might find it easier to get some help from a professional to complete your tax return. But if your situation is fairly straightforward, there are resources online to help you navigate through the process.
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Disclaimer: This article is for information only and does not constitute financial advice. Tax treatment depends on your individual circumstances and may be subject to change in the future. We do not offer any tax advice.
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