Do you have to file a Self Assessment tax return?

This article was written by FreeAgent’s Content team and our Chief Accountant, Emily Coltman FCA.

Unsure whether you need to register for Self Assessment and submit a tax return to HMRC this year? In this guide, we explain the circumstances in which you’ll need to file a tax return.

What is Self Assessment?

Self Assessment is a process for reporting any income an individual makes that HMRC might not already know about. Some people must file a Self Assessment tax return by 31st January each year as a legal requirement, while others may choose to do so voluntarily.

When are you legally required to file?

You’re legally required to register for Self Assessment and send a tax return to HMRC for the 2024/25 tax year if any of the following applied to you during the tax year (6th April 2024 - 5th April 2025):

• you were self-employed as a ‘sole trader’ and earned more than £1,000
• you were a partner in a business partnership
• your total taxable income was greater than £100,000
• you had to pay the High Income Child Benefit Charge

If you’re still unsure about whether you need to file a tax return, HMRC has a handy tool that can help you work this out. If it turns out that you do, you can find more information about how to register for Self Assessment in our dedicated guide.

We’ve also provided more information about when different people might need to register based on their business type below.

Sole traders

As outlined above, you’ll have to send a tax return if you were self-employed as a sole trader and earned more than £1,000 during the tax year.

How HMRC decides if you’re self-employed

If you sell goods or services, it’s important to bear in mind that HMRC may class you as self-employed and trading even if you don’t think you are.

To help determine whether you’re self-employed and trading, HMRC uses a framework called ‘badges of trade’. HMRC’s Business Income Manual defines these ‘badges’ as:

• whether you’re looking to make a profit by selling goods or services
• the number of transactions you make (the more transactions, the more likely it is that you’re trading)
• the nature of what you sell (the more utilitarian, the more likely it is that a trade exists)
• the existence of similar trading transactions or interests (if you are already a florist, for example, selling a potted plant would also be part of your trade)
• whether you make any changes to items before you sell them (if you alter items to sell then you’re more likely to be trading)
• the way that sales are carried out and whether this is typical of a trade
• the origin of the money you use to buy items that you sell (if you borrowed money to buy the items then it’s likely that selling them is a trade)
• how you acquire items that you sell (a one-off sale of items you inherited is unlikely to be a trade)
• how much time you leave between buying or acquiring items and then selling them (the less time you keep items, the more likely you are to be trading)

It’s also important to remember that you can be self-employed even if you’re also in full-time employment.

Limited company directors

If you’re the director of a limited company, you may well be asked to file a Self Assessment tax return every year. This is likely to be the case if you’re taking pay and/or dividends from the company.

If the company is a non-profit organisation and/or you didn’t receive any pay or benefits (like travel expenses or a company car) during the tax year, HMRC may not require you to file a tax return.

In addition, all companies - including non-profit organisations - are required to submit an annual Company Tax Return to HMRC.

Partners in a business partnership

If you’re a partner in a business partnership, HMRC expects you and your business partner(s) to file a Self Assessment tax return every year. The partnership itself is also required to submit an annual partnership tax return to HMRC.

When might you want to file a tax return voluntarily?

There are certain circumstances in which some individuals might opt to file a Self Assessment tax return voluntarily. For example, you may choose to fill out a tax return if you wish to claim certain reliefs for Income Tax, like claiming a loss from your sole trade against income earned from a different source.

If you’re unsure about whether or not you should voluntarily file a tax return, you can speak to an accountant who will be able to advise you.

A simple way to take the stress out of Self Assessment

If you’re a sole trader or limited company director, FreeAgent’s award-winning accounting software uses the data you enter throughout the tax year to populate parts of your tax return for you.

It also calculates how much Income Tax you owe and, if you’re a sole trader, how much you owe in Class 2 and Class 4 National Insurance.

When you’re ready to file, you can use FreeAgent to submit your tax return directly to HMRC.

Find out more about Self Assessment in FreeAgent and see just how easy filing your tax return can be.