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How much do I need to earn to file a tax return?

  • 3 min read
  • Last updated 29 May 2022

If you’re a sole trader or the director of a limited company, then it’s likely that you’ll have to file a tax return. 

Once you start earning over a certain amount, you’ll be required by law to complete what’s known as a Self Assessment. HMRC will need to know how much you earned, even if the money you earn falls below various tax allowances that you’re claiming. 

There are a few exceptions to this rule. But generally, if you’re earning money outside full-time employment, prepare yourself to have to complete Self Assessment. Take a look at our guide below on everything you need to know about tax returns.

So how much do I need to earn to file a tax return?

As a general rule, if you earn more than £1,000 of untaxed income during a tax year, you will have to do a tax return.

How will I know if I need to file a tax return?

Most working people in the UK pay all their tax ‘at source,’ through what’s known as Pay As You Earn (PAYE). This tax is automatically deducted from your wage before you receive your monthly/weekly payment from your employer. 

If this is you, it’s unlikely you’ll have to complete a Self Assessment tax return. But, there are a few exceptions to this as we’ll explain below. 

If you fall into one of the following categories, you’ll almost always have to file a tax return:

  • You’re self-employed
  • You earn more than £100,000 per year
  • You’re a landlord
  • You claim tax relief on your pension
  • You’ve made money from an investment
  • You earn money from side jobs alongside your main employment

It’s my first time. Help!

If you’ve never done a tax return before but now you think you might have to, the first step to take is to register for Self Assessment. This is how you let HMRC know that you’re earning untaxed income. The deadline to do this is the 5th October in any given year. 

When it comes to actually paying your tax return, you should do this by 31st January the year after the tax year you’re paying for. For example, if you’re paying your 2022/2023 tax return, this should be done and paid for by the 31st January 2024.

And isn’t there a tax allowance?

Yes! In fact, there are lots. What you can claim depends on the reason you’re doing a tax return. 

These are just a few but check out a bigger list of schemes and allowances here. 

How much will I pay?

How much tax you’ll pay will depend on a number of factors, such as how much you earn and what expenses you can claim for. If your self-employed work accounts for your full-time income, then you’ll be required to pay:

  1. Income tax
  2. National Insurance 

From July 2022, National Insurance is changing. Take a look at the changes here.

If you earn less than the personal allowance (£12,570), you don’t pay any Income Tax.

Not sure what NI contributions you need to make? You can work it out yourself. Try our National Insurance Calculator with the updated rates for 2022/23!

Your situation

Outlined number oneImage of an arrow
Self-employed income
Self-employed expenses
?
How did you make money?

Tax and profit

Outlined number two
  • Total earnings
    £49,000
    £1,000 tax-free Trading Allowance
    ?
  • NI contributions
    £3,795
    Class 2 NI: £164
    Class 4 NI: £3,632
  • Income tax
    £7,086
  • What you’re left with
    £38,119

How your National Insurance contributions are calculated

When you’re self-employed, you have to pay your National Insurance contributions yourself in your annual Self Assessment, together with any income tax you might owe.

National Insurance breakdown

You pay no NI contributions on the first £12,570 that you make.

You will need to pay Class 2 NI worth £164.

You will also have to pay £3,632 (9%) on your income between £12,570 and £48,000.

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