If you’ve never had to complete a self-assessment tax return, the first time can be daunting. But don’t worry: we’ll demystify the process in this guide. And if you have completed one before, this guide might still teach you a thing or two about doing your self-assessment better.
What exactly is self-assessment?
Self-assessment is the way millions of people in the UK report and pay their taxes. Specifically, 11.7 million people filed their tax return via self-assessment for the 31 January deadline in 2023.
As the name suggests, self-assessment is all about the taxpayer assessing their own tax liabilities by telling HMRC about their financial activities and income via form SA100. HMRC then uses that reported income to work out how much tax and National Insurance contributions (NICs) you need to pay.
This is in stark contrast to employees, who have their income tax and NICs automatically deducted through the PAYE system — this doesn’t happen for self-employed workers, or for some other sources of income, such as dividends, pensions or income from savings and investment, which is again where self-assessment comes in.
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Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.