Most people in the UK pay income tax through PAYE. Their employer takes it before they receive their pay. But if you have income that is not taxed at source, HMRC expects you to report it through a Self Assessment tax return.
The rules catch more people than they expect. Miss the registration step and HMRC can charge penalties.
Disclaimer: This article is for general information only. Tax obligations depend on your specific circumstances. Speak to a qualified accountant if you’re unsure whether you need to file.
Do all self-employed people need to do Self Assessment?
Yes. If you’re a sole trader and your gross income from self-employment is more than £1,000 in a tax year, you must register for Self Assessment and file a return. That applies even if you have not made a profit yet. The £1,000 threshold is turnover, not profit.
The £1,000 limit is the trading income allowance. Under that, you do not need to report self-employment income to HMRC. Over it, you must register by 5 October after the end of the tax year in which you started trading.
So if you started self-employment in the 2025/26 tax year, which ended on 5 April 2026, your registration deadline was 5 October 2026.
Failing to notify HMRC is itself a penalty offence. HMRC can charge a “failure to notify” penalty based on the tax you owe.
Do company directors need to file Self Assessment?
Yes, in most cases. HMRC usually asks company directors to file a Self Assessment return even when their income is taxed through PAYE. That is because directors often receive dividends, use company expenses, or have other tax issues that PAYE does not cover.
If you’re a director and HMRC has sent you a Notice to File, you must submit a return.
If you have not received one, you should still register if you get income that is not fully taxed through PAYE, such as dividends from your own company.
What income triggers a Self Assessment requirement?
HMRC requires a Self Assessment return for several types of income beyond self-employment. These include rental income from property, investment income and dividends above a certain threshold, foreign income, capital gains, and income above £100,000, where the personal allowance starts to reduce.
Common triggers include:
Rental income. If you receive rent from a property and that income is not fully covered by your allowances, you must declare it. Even if you make a loss, declaring it allows you to carry the loss forward.
Dividends and savings. If you receive dividends above the annual dividend allowance, or savings interest above the Personal Savings Allowance, you may need to file. Check the current thresholds at gov.uk, because they have changed in recent years.
Foreign income. Any income earned abroad that is taxable in the UK must be declared. Even if you paid tax in the country of origin, the UK has different rules and may require a return.
Income over £100,000. If your adjusted net income exceeds £100,000, your personal allowance reduces by £1 for every £2 of income over that threshold. PAYE does not handle that, so you need a Self Assessment return.
High Income Child Benefit Charge. If you or your partner receive Child Benefit and either of you earns above the threshold, check the current figures at gov.uk. This changed in April 2024. A Self Assessment return is required to pay the High Income Child Benefit Charge.
Partners in a business partnership. Every partner must file individually and report their share of the partnership income.
What if you’re employed but have other income?
Your employer handles income tax on your salary. But any other taxable income, such as freelance work, rental income, or dividends, sits outside PAYE. HMRC will not know about it unless you tell them.
If the extra income is small, such as a few hundred pounds in bank interest, your tax code may handle it. But anything significant, or anything HMRC has not already put into your tax code, needs to be declared.
When in doubt, register. It is far better to file a return you did not need than to miss one you did.
What if HMRC sends you a Notice to File?
If HMRC issues a Notice to File, you must submit a return for that year, even if you have no tax to pay. Ignore the notice and you will face automatic late filing penalties, starting with a £100 fixed charge.
You can ask HMRC to withdraw a Notice to File if you believe you do not need to file. But you must do this before the deadline, not after.
How do you register for Self Assessment?
You register online through your HMRC online account. Self-employed people register as sole traders. Directors and people with other income register separately. If you’re new to Self Assessment, HMRC sends your Unique Taxpayer Reference (UTR) by post, and that usually takes around 10 working days.
You need your UTR to submit a return, so register early. Do not wait until January.
Working with an accountant for self assessment means the registration, filing, and payment calculations are handled correctly from the start.
DASA can file your return for you
If you have recently become self-employed, received new income sources, or are simply unsure whether you need to file, we can review your situation and handle the return.
Get a quote and we will send you our current pricing, through DASA’s self assessment service.