What is Self Assessment?
Definition of Self Assessment
Self Assessment is short for the 'Self Assessment tax return', a form that many business owners need to send to HMRC each year to report how much they have earned and from what sources.
The term 'Self Assessment' actually refers to the fact it's the individual's - or company's - responsibility to work out how much tax he or she should pay. The Self Assessment tax return is usually just called a tax return.
The tax return covers most income earned in the fiscal year and must be filed with HMRC, if filed online, by 31st January after the end of the relevant fiscal year. A tax return that's not filed online must be with HMRC by 31st October after the end of the fiscal year.
It's sometimes the case that a sole trader's accounting year does not match the tax year. In this case they will report on their tax return their earnings for the accounting year that finished during that tax year. There are special rules for the early and final years of a business's life.
Some income is earned tax-free and is therefore not reported on the tax return at all.
Certain tax breaks are also handled through the tax return.
Submitting your Self Assessment tax return online
FreeAgent's accounting software automatically calculates your Self Assessment liability throughout the tax year. When it's time to file, FreeAgent fills up to 90% of the sole trader Self Employment form, and you can submit your Self Assessment tax return online directly to HMRC.
Self Assessment help
For more help with your Self Assessment tax return, download our free Self Assessment guides
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.