Personal tax — self assessment

Under the self assess­ment regime an indi­vid­ual is respon­si­ble for ensur­ing that their tax lia­bil­i­ty is cal­cu­lat­ed and any tax owing is paid on time.

The self assessment cycle

Tax returns are issued short­ly after the end of the fis­cal year. The fis­cal year runs from 6 April to the fol­low­ing 5 April (thanks to the switch from the Julian to the Gre­go­ri­an cal­en­dar in 1752), so 2025/26 runs from 6 April 2025 to 5 April 2026. Tax returns are issued to all those whom HMRC are aware need a return includ­ing all those who are self-employed or com­pa­ny direc­tors. Those indi­vid­u­als who com­plete returns online are sent a notice advis­ing them that a tax return is due. If a tax­pay­er is not issued with a tax return but has tax due they should noti­fy HMRC who may then issue a return.

A tax­pay­er is nor­mal­ly required to file their tax return by 31 Jan­u­ary fol­low­ing the end of the fis­cal year. The 2025/26 return must be filed by 31 Octo­ber 2026 if sub­mit­ted in ‘paper’ for­mat. Returns sub­mit­ted after this date must be filed online oth­er­wise penal­ties will apply.

Penalties

Late fil­ing penal­ties apply for per­son­al tax returns as fol­lows:

• £100* penal­ty imme­di­ate­ly after the due date for fil­ing (even if there is no tax to pay or the tax due has already been paid)

*The full penal­ty of £100 will always be due if your return is filed late even if there is no tax out­stand­ing.

Addi­tion­al penal­ties can be charged as fol­lows:

• over 3 months late – a £10 dai­ly penal­ty up to a max­i­mum of £900
• over 6 months late – an addi­tion­al £300 or 5% of the tax due if high­er
• over 12 months late – a fur­ther £300 or a fur­ther 5% of the tax due if high­er. In par­tic­u­lar­ly seri­ous cas­es there is a penal­ty of up to 100% of the tax due.

Calculating the tax liability and ‘coding out’ an underpayment

The tax­pay­er does have the option to ask HMRC to com­pute their tax lia­bil­i­ty in advance of the tax being due in which case the return must be com­plet­ed and filed by 31 Octo­ber fol­low­ing the fis­cal year.  This is also the statu­to­ry dead­line for mak­ing a return where you require HMRC to col­lect any under­pay­ment of tax through your tax code, known as ‘cod­ing out’. How­ev­er if you file your return online HMRC will extend this to 30 Decem­ber. Whether you or HMRC cal­cu­late the tax lia­bil­i­ty there will be only one assess­ment cov­er­ing all your tax lia­bil­i­ties for the tax year.

Changes to the tax return

Corrections/Amendments

HMRC may cor­rect a self assess­ment in order to cor­rect any obvi­ous errors or mis­takes in the return.

An indi­vid­ual may, by notice to HMRC, amend their self assess­ment at any time with­in 12 months of the date of sub­mis­sion.

Enquiries

HMRC may enquire into any return by giv­ing writ­ten notice. In most cas­es the time lim­it for HMRC is with­in 12 months fol­low­ing the fil­ing date.

If HMRC does not enquire into a return, it will be final and con­clu­sive unless the tax­pay­er makes an over­pay­ment relief claim or HMRC makes a dis­cov­ery.

It should be empha­sised that HMRC can­not query any entry on a tax return with­out start­ing an enquiry. The main pur­pose of an enquiry is to iden­ti­fy any errors on, or omis­sions from, a tax return which result in an under­state­ment of tax due. Please note how­ev­er that the open­ing of an enquiry does not mean that a return is incor­rect.

If there is an enquiry, we will also receive a let­ter from HMRC which will detail the infor­ma­tion regard­ed as nec­es­sary by them to check the return. If such an even­tu­al­i­ty aris­es we will con­tact you to dis­cuss the con­tents of the let­ter.

Keeping records

HMRC wants to ensure that under­ly­ing records to the return exist if they decide to enquire into the return.

Records are required of income, expen­di­ture and reliefs claimed. For most types of income this means keep­ing the doc­u­men­ta­tion giv­en to the tax­pay­er by the per­son mak­ing the pay­ment. If expens­es are claimed records are required to sup­port the claim.

Checklist of books and records required for HMRC enquiry

Employees and Directors

• Details of pay­ments made for busi­ness expens­es (eg receipts, cred­it card state­ments)
• Share options award­ed or exer­cised
• Deduc­tions and reliefs

Doc­u­ments you have signed or which have been pro­vid­ed to you by some­one else:

• Inter­est and div­i­dends
• Tax deduc­tion cer­tifi­cates
• Div­i­dend vouch­ers
• Gift aid pay­ments
• Per­son­al pen­sion plan cer­tifi­cates.

Per­son­al finan­cial records which sup­port any claims based on amounts paid eg cer­tifi­cates of inter­est paid.

Business

• Invoic­es, bank state­ments and pay­ing-in slips
• Invoic­es for pur­chas­es and oth­er expens­es
• Details of per­son­al draw­ings from cash and bank receipts