Who Must Register for Self-Assessment by 5 October?

The world of tax returns can seem daunting. If you’re thinking, “Isn’t that just for the self-employed?” or “Isn’t the deadline in January?”, you’re not alone. However, there’s more to it than meets the eye. Whether you’re self-employed or renting out a room on Airbnb, understanding the rules around self-assessment can save you both time and money.

Understanding The Deadlines

Many of us know about the January tax return deadline, but an equally important one exists in October. If you need to register for self-assessment for the 2022-23 tax year, make sure to mark 5 October 2023 in your calendar. After registering, the deadline to submit your online tax return and pay any outstanding tax is 31 January 2024. If you’re among those making payments on account, remember a second payment deadline on 31 July annually.

Still, leaning towards the old-fashioned way and considering a paper tax return? That comes with its own deadline: 31 October.

Out of the roughly 12 million people who file their tax return annually, an overwhelming 96% do it online.

Who Needs to Register for Self-Assessment?

Sarah Coles, from Hargreaves Lansdown, sheds light on this: “New self-assessment customers could range from someone with a side gig in addition to their main job, to those trading in crypto assets or renting out property. If there’s any income that hasn’t already been taxed, it’s time to register.”

Reasons to Register

There are various reasons why someone might need to register for self-assessment. Here are 11 of the most common:

  1. Self-employment or Business Partnership: If you don’t pay tax through PAYE, you’ll need to inform HMRC of your earnings and then pay any tax via self-assessment.
  2. Buy-to-Let Landlord: Earned money from renting out properties? Inform HMRC to pay the appropriate tax.
  3. Higher-rate Taxpayer with a Pension: Depending on your pension type, you might need to claim additional tax relief.
  4. Higher-rate Taxpayer Donating to Charity: You can claim back extra tax relief through a self-assessment claim.
  5. Receiving Child Benefit with Income Over £50,000: A tax return can help you determine the amount to pay due to the high income child benefit tax charge.
  6. Capital Gains Over £6,000: If you’ve profited from selling something that’s increased in value and it’s above the threshold, a tax return is needed.
  7. Incurred a Capital Loss: This can be offset against other gains or future gains.
  8. Interest and/or Dividends Over £10,000: Exceeding allowances might mean paying extra tax.
  9. Investing in EIS or VCT: Some investments come with tax benefits claimable via self-assessment.
  10. Side Hustle Earnings Over £1,000: Profits above the £1,000 trading allowance require a tax return.
  11. Renting a Spare Room Earning Over £7,500: Earnings above this threshold need self-assessment registration.

However, this list isn’t exhaustive. Use HMRC’s online checking tool to determine if you need to complete a tax return.

Additional Tips to Remember

No Longer Need to Complete a Tax Return?: Inform HMRC before 31 January 2024 to avoid penalties.

Beware of Scams: Never share your HMRC login details with anyone. Familiarize yourself with common scams to stay safe.

In conclusion, while the world of tax returns can seem complicated, being informed and proactive can simplify the process. Whether you’re self-employed, investing in the stock market, or just renting out a spare room, understanding the rules around self-assessment will ensure you stay on the right side of the taxman.