Do I Really Need to Do a Self Assessment Tax Return?

What Is a Self Assessment Tax Return?

Self Assessment is the system HMRC uses to collect Income Tax from people whose income is not fully taxed through PAYE or another deduction system.

If you are employed, your employer will normally deduct Income Tax and National Insurance through your wages. However, HMRC may not automatically receive the correct tax from income you earn independently.

A Self Assessment tax return allows you to report your income, record eligible expenses and calculate your final tax position for the relevant tax year.

You can learn more about the filing process on our Self Assessment Tax Return service page .

Who Commonly Needs to Complete Self Assessment?

Whether you need to file depends on your personal circumstances. In our experience at Go Tax Refunds, the most common cases involve people receiving self-employed or otherwise untaxed income.

This can include:

• Self-employed construction workers and tradespeople
• Workers operating under the Construction Industry Scheme
• Self-employed security guards
• Uber, Uber Eats, Deliveroo and Just Eat drivers
• Freelancers and independent contractors
• People earning money from online selling
• People receiving rental income from a property
• People receiving income from more than one source
• People with income that has not already been fully taxed

There are other situations in which a return may be required. Your complete income position should therefore be reviewed rather than relying only on your job title.

Construction workers may also want to review our CIS Tax Refund service if tax has been deducted from their payments under the Construction Industry Scheme.

Does the £1,000 Self-Employment Threshold Apply to Me?

One of the most common misunderstandings we encounter concerns the £1,000 trading allowance.

If your total gross trading income is £1,000 or less during a tax year, the trading allowance may mean that you do not have to report that income to HMRC. However, exceptions and additional conditions can apply.

If your gross trading income is more than £1,000, you will generally need to tell HMRC and may need to register for Self Assessment.

Income from different side hustles may need to be combined

The £1,000 trading allowance is not normally a separate allowance for every trade or side hustle.

For example, imagine that someone earns:

• £600 from delivery work
• £300 from freelance work
• £250 from selling products online

Looking at each activity separately could make the income appear to be below the threshold. However, the combined trading income is more than £1,000.

The individual may therefore need to register and report the income, even though none of the individual activities generated more than £1,000 on its own.

Does Selling on eBay Mean You Need Self Assessment?

Not every person who sells something through eBay or another online marketplace is operating a business.

Selling your own unwanted possessions is different from regularly buying or producing items with the intention of selling them for a profit.

Factors that may indicate trading include:

• Buying items specifically to resell them
• Making or producing products to sell for profit
• Selling items regularly rather than occasionally
• Operating in an organised or commercial way
• Relying on the activity as an ongoing source of income

The number of transactions alone does not always determine whether someone is trading. What you sell, why you acquired it and how the activity is conducted can all be relevant.

A Real Example: The Uber Eats Driver Who Did Not Know He Had to File

We dealt with an Uber Eats driver who had earned approximately £7,800 during one tax year.

He had not completed a Self Assessment tax return because he did not realise that his delivery income needed to be reported.

His position only came to his attention when he received a letter from HMRC stating that a return was required.

This is a situation we frequently encounter. Delivery platforms make it easy to begin working and receive payments, but the individual providing the service is often responsible for managing and reporting their own tax.

How Go Tax Refunds helped

We reviewed the driver's income and identified the legitimate business costs connected with his delivery work.

By including the allowable expenses that applied to his circumstances, we were able to reduce his taxable profit and consequently reduce his tax bill.

Because the matter was addressed correctly and promptly, he also avoided penalties in this particular case.

Every case is different. Expenses should only be claimed when they are legitimate, supported by appropriate records and permitted under the applicable HMRC rules.

Delivery drivers can find more detailed information in our Food Delivery Driver Tax Guide .

Filing a Tax Return Does Not Automatically Mean You Owe Tax

This is one of the biggest misunderstandings we see among new clients.

Some people avoid registering because they assume that submitting a return will automatically create a large tax bill. In reality, filing a return and owing tax are two separate issues.

Your return records your income and the allowable costs of earning that income. Your expenses, allowances, tax already deducted and other income can all affect the final calculation.

You might need to submit a return but have little or no additional tax to pay. In other situations, tax may be due, but correctly recording allowable expenses could substantially reduce the amount.

Ignoring the filing requirement because you believe that no tax is due can still cause problems. Even someone who ultimately owes no additional tax may still be required to submit a return.

What Expenses Can Reduce Your Taxable Profit?

Self-employed people are generally taxed on their taxable profit rather than simply on all the money paid into their account.

Taxable profit is broadly calculated by taking business income and deducting qualifying business expenses.

In our experience, people frequently overlook expenses such as:

• Eligible home-office costs
• Business-related phone and internet use
• Business insurance
• Accountancy and professional fees
• Allowable business bank charges
• Software and business subscriptions
• Qualifying parking costs
• Vehicle and travel costs where the relevant conditions are met
• Tools, equipment and materials

This does not mean that every expense in these categories is automatically deductible.

Personal costs are not normally allowable. Where an expense has both business and personal use, only the legitimate business proportion should normally be included.

You can also use our free mileage calculator to estimate the potential value of qualifying business mileage.

Trading allowance or actual expenses?

Where your trading income exceeds £1,000, you may have a choice between using the trading allowance and deducting your actual allowable expenses.

You cannot normally claim both against the same trading income.

For someone with very few business costs, the trading allowance could be more beneficial. For someone with substantial expenses, claiming the actual allowable costs may produce a lower taxable profit.

The correct approach depends on the figures involved, which is why the available options should be compared rather than selecting one automatically.

What Records Should You Keep?

Accurate records make completing a Self Assessment tax return easier and help support the figures reported to HMRC.

We recommend keeping records throughout the tax year rather than trying to reconstruct everything when the filing deadline approaches.

Depending on your work, useful records may include:

• Payment remittances and earnings statements
• Sales invoices
• Purchase invoices
• Receipts for tools, equipment and materials
• Fuel and qualifying vehicle-expense records
• Parking receipts
• Business insurance documents
• Software and subscription invoices
• Bank statements
• Mileage records where relevant
• Rental income and property-expense records

You should be able to explain how an expense relates to your work and provide appropriate evidence when required.

Using a separate bank account for business transactions can also make record-keeping easier, even where a separate business account is not legally required for your type of business.

Self-employed people and landlords may also need to consider how Making Tax Digital for Income Tax affects their future record-keeping and reporting responsibilities.

What Happens If You Do Not File?

Ignoring Self Assessment can make a manageable situation more difficult and more expensive.

Possible consequences can include:

• Late-filing penalties
• Additional penalties when a return remains outstanding
• Interest and late-payment charges on unpaid tax
• HMRC estimating the amount it believes you owe
• Questions or compliance checks from HMRC
• More time and expense spent correcting the position later

A late return can attract an initial penalty even where no tax is ultimately due.

Further penalties and charges may arise depending on how late the return becomes and whether tax remains unpaid.

What should you do if you have already missed the deadline?

Do not ignore the matter because you are worried about what may happen.

The sensible approach is to establish which tax years are outstanding, gather the available income and expense records, complete the required returns and address any tax or penalties that apply.

If you have a reasonable excuse for filing or paying late, it may be possible to appeal a penalty. However, an appeal should be based on the actual circumstances and supported by relevant evidence.

Taking action promptly will normally give you more options than leaving the matter unresolved.

Can You Complete Self Assessment Yourself?

It is possible to complete your own Self Assessment tax return.

For someone with straightforward income, organised records and a good understanding of the relevant rules, filing independently may be manageable.

However, completing the online form is only one part of the process. You must also determine:

• Which income needs to be declared
• Which sections of the return apply
• Which expenses are allowable
• Whether to use the trading allowance or actual expenses
• Whether National Insurance applies
• Whether payments on account are required
• Whether tax already deducted has been recorded correctly
• Whether earlier tax years also need attention

Providing incorrect or incomplete information can lead to unnecessary tax, penalties, delays or further questions from HMRC.

Our Professional Opinion

Based on our experience at Go Tax Refunds, it is generally better to have a professional review and manage your tax position.

Tax legislation can be complex, and the correct treatment of income and expenses depends on each person's circumstances.

A professional can identify the information that needs to be included, review relevant expenses and help prevent mistakes that could otherwise result in extra tax, fines or penalties.

Professional support is particularly valuable when:

• You have more than one source of income
• You work in construction or under CIS
• You earn money through delivery platforms
• You receive rental income
• You have missed a filing deadline
• HMRC has contacted you
• You are unsure which expenses can be claimed
• Your records are incomplete
• You have never filed a tax return before

The objective is not to claim every possible cost without evidence. It is to report your income correctly, claim all legitimate reliefs and expenses available to you, and avoid paying more tax than you are legally required to pay.

So, Do You Really Need to Do a Self Assessment Tax Return?

You may need to complete a return if you are self-employed, receive untaxed income, earn money from side hustles, work through delivery platforms, operate within construction or receive rental income.

If your total gross trading income exceeds £1,000 during a tax year, this is an important indication that you may need to register and report the income.

However, your full circumstances should be considered before reaching a final conclusion.

Remember that needing to file does not necessarily mean that you will owe tax. Allowable expenses, existing tax deductions and your wider income position can all affect the final calculation.

The most important thing is not to guess. Check your position early, retain your records and seek professional advice when you are uncertain.