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How to do a Self Assessment tax return

If you’re not sure how to do a Self Assessment tax return, don’t panic. It’s not as complicated as it might seem. You should first work out why you need to do a tax return:

  • You’re a landlord earning rental income
  • You earn over £100,000
  • You’re self-employed
  • You have side-gigs alongside your full-time job
  • You’re an investor with profits that exceed the tax-free allowances
  • You earn over £50,000 and want to claim additional pension relief

But how to do a Self Assessment tax return?

This depends on what type of tax return you need to do. The more reliefs you’re claiming and the more complicated your return, the harder it will be to do it on your own. For example, if you’re self-employed and become pregnant, you may start claiming the Maternity Allowance which will affect the calculations. 

The margin for error is slim with HMRC so getting help may be worth while. 

Generally, you can choose between:

  • Doing your tax return yourself via HMRC
  • Paying an accountant to help you with it
  • Finding an online, smarter alternative (…ahem)

When do I do the return?

There are two dates to bear in mind. 

If you’ve never done your tax return before, you will need to register for Self Assessment first. This is how HMRC knows that you are earning untaxed income. You should do this by 5th October in any given year. 

When it comes to paying your tax return, you should do this by 31st January the year after the tax year you’re paying for. If you’re paying your 2019/2020 tax return, this should be paid by 31st January 2021.

Make sure that you do this on time. Doing either of these things late will incur penalties.

Tax reliefs for landlords

If you’re a landlord, there are a few things to consider when you do your tax return:

  • Do you live in the property that you’re renting out?

If you’re only renting a room in your property, you’re covered by the Rent-a-Room scheme. You can earn up to £7,500 per year tax-free. Anything over that you’ll pay Income Tax on.

  • I don’t live in the property

You can claim the Property Income Allowance which gives you £1000 of your rental income tax-free. You can also claim a 20% tax relief on mortgage interest.

Read more about tax owed on rental income here. 

Tax reliefs for self-employed work

If you’re self-employed, you only pay tax on income over the £12,500 Personal Allowance. You are also allowed to deduct your business expenses from your earnings. 

If you do side gigs alongside your full-time job, you can make the most of the Trading Allowance which allows you to earn up to £1000 additional income tax-free. Beyond this, you must do a tax return at the usual rates of Income Tax and National Insurance.

I earn over £100,000

When you earn over £100,000, you’re classed as a high earner. Therefore, even though you pay your taxes through your salary, HMRC needs to check your income to ensure that you’re paying the correct amount of tax. To do this, you need to do a tax return.

It’s also worth nothing that as a high earner, you can end up paying up to 60% tax! However, there are ways to reduce this. Read here to see how.

I’m an investor

To pay tax on your profits, you should pay attention to Capital Gains Tax rates. The Capital Gains Tax Allowance in the 2020/21 tax year is £12,300. This means that any profits earned that are less than this are tax-free. There are other factors that affect the tax you owe on any investment profits, such as carrying forward losses, but it can all get a little bit complicated.

To make it simple, we have a Capital Gains Tax calculator to help you work it out. 

Where did you get profits?
Profits from capital gains
£
Annual income
£
Outside of capital gains
Select tax year
Profits after tax
£18,560
CGT
£1,440
Profits from selling shares
£20,000
Capital Gains Tax (CGT)
£1,440

First £12,300 are tax-free.

£1,000 taxed at 10%: £100

£6,700 taxed at 20%: £1,340

Your profits after tax
£18,560

Hey there! We really hope this calculator helped you. Tax matters can be a dreadful topic at times. We know. That’s why we started TaxScouts.
A stress-free way to getting your taxes done.

Have a minute? See how it works

How your capital gains tax is calculated

Your total capital gains tax (CGT) owed depends on two main components:

  1. How much you earn in total
  2. What type of assets you sell

Your overall earnings determine how much of your capital gains are taxed at 10% or 20%.
Our capital gains tax rates guide explains this in more detail.

In your case where capital gains from shares were £20,000 and your total annual earnings were £69,000:

Capital gains tax (CGT) breakdown

You pay no CGT on the first £12,300 that you make

You pay £100 at 10% tax rate for the next £1,000 of your capital gains

You pay £1,340 at 20% tax rate on the remaining £6,700 of your capital gains

Hey there! We really hope this article helped you. Tax matters can be a dreadful topic at times. We know. That's why we started TaxScouts.
A stress-free way to getting your taxes done.

Have a minute? See how it works

More guides & useful information

Let us sort your Self Assessment online. £119, all in.

That’s right. No matter how complicated it gets or why you need to do a return in the first place, it’ll cost £119 to get it done. That includes VAT, last-minute changes and all the support you may need.

How TaxScouts works

Answer a few simple questions

And we mean a few. After a couple of minutes of answering questions online we’ll have everything we need to start preparing your tax return.

Then get paired with a tax return accountant

That’s right, you’ll be matched with a real certified accountant who is best suited to prepare your return. Plus, they’re on hand for questions whenever you need.

We file your Self Assessment for you

Once you’ve signed off your return, your TaxScouts accountant will submit your return with HMRC for you.

That’s it! We told you it was simple.