Income Tax

Criteria for Submitting a Self-Assessment Tax Return for Foreign Income Earned from Employment

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In the UK, foreign employment income (earnings from work performed abroad) is generally taxable if you are a UK resident for tax purposes under the Statutory Residence Test (SRT). The key criteria for whether you must submit a Self Assessment (SA) tax return (form SA100 and relevant supplementary pages) for such income are outlined below, based on HMRC guidance for the 2024-25 tax year (6 April 2024 to 5 April 2025). These apply regardless of whether the income was remitted to the UK, unless you qualify for and claim the remittance basis (which typically requires non-UK domicile and use of form SA109).

1. Residency Status

  • UK Resident: You must report foreign employment income if you are UK resident (as determined by the SRT, considering factors like days spent in the UK, ties to the UK, and home/work circumstances). Worldwide income is taxable in the UK, so foreign earnings are included unless exempt under a Double Taxation Agreement (DTA) or other reliefs.
    • If you became or ceased UK resident during the year, split-year treatment may apply (via SA109), but reporting is still required if any portion is taxable.
  • Non-UK Resident: Foreign employment income is generally not taxable in the UK unless it relates to duties performed in the UK or is remitted here. However, if you have any UK-source income or gains, or if remittance basis applies, a return may still be needed.
  • If you are eligible for Overseas Workday Relief (OWR) – e.g., non-UK domiciled, recently returned to the UK, and employment duties partly abroad – unremitted foreign earnings may not be taxable, but you must still report via SA109 if claiming OWR.

2. Income Thresholds and Taxability

  • General Threshold for SA Return: You must file if you have any foreign income (including employment earnings) that is untaxed in the UK. There is no specific de minimis for foreign employment, but:
    • If total untaxed foreign income (all sources) exceeds £2,000 in the 2024-25 tax year, you must declare it.
    • For smaller amounts (£300 or less), you may avoid filing if foreign tax paid equals or exceeds the UK tax due (via informal arrangement with HMRC), but this is discretionary and not guaranteed. Contact HMRC to confirm.
  • Taxed Abroad: If foreign tax was withheld, you can claim Foreign Tax Credit Relief (FTCR) to avoid double taxation, but you must still report the income if it’s taxable in the UK.
  • DTA in Place: Check if a DTA exists with the foreign country (listed in SA106 notes, pages 3-5). DTAs may limit UK taxation or allow relief, but reporting is required to claim it.
  • Remittance Basis: If non-UK domiciled and claiming remittance basis (via SA109), only income remitted to the UK is taxable. You must file if remittances exceed thresholds or if claiming reliefs.
  • Exemptions: Income is exempt if covered by a DTA allocating taxing rights solely to the foreign country, or if it’s small and foreign tax matches UK liability. However, you must notify HMRC by 31 January 2026 if no return is needed to avoid penalties.

3. Other Triggers for Filing

  • You received a notice to file from HMRC.
  • The income pushes your total taxable income over £150,000, triggers High Income Child Benefit Charge, or involves other complexities (e.g., self-employment overlap, pensions, or capital gains).
  • You want to claim reliefs like FTCR, OWR, or split-year treatment.
  • Employer pays foreign tax on your behalf: This is treated as additional gross pay, requiring reporting.
  • If the income relates to UK duties while abroad (e.g., for a UK employer), it may be under UK PAYE, reducing the need for SA unless adjustments are needed.

4. When You Do Not Need to File

  • No foreign income, or it’s fully exempt under DTA and not remitted.
  • Small amounts (£300 or less) where foreign tax >= UK tax, and HMRC agrees informally (call 0300 200 3300 to check).
  • You’re non-resident and have no UK-taxable elements.
  • Use the online tool at www.gov.uk/check-if-you-need-tax-return to confirm.

If in doubt, consult a tax advisor, as incorrect non-filing can lead to penalties (up to 100% of tax due plus interest). File online by 31 January 2026 or paper by 31 October 2025 for HMRC to calculate tax if needed.

Foreign employment income is reported on the SA102 ‘Employment’ pages (one per job), with foreign tax details on SA106 ‘Foreign’ pages for FTCR. Use SA109 for residence/remittance issues.

Checklist of Documents, Evidence, Receipts, Dates, Invoices, and Forms Needed

When preparing and submitting a Self Assessment tax return for foreign employment income, you do not need to attach documents to the return itself (HMRC accepts the figures you provide). However, you must keep records for at least 6 years (or 22 months if self-employed) in case of enquiry. If filing on paper or if HMRC requests, you may need to provide evidence. Gather these to accurately complete the return and support claims like FTCR (which requires proof of foreign tax paid under local laws, including filing a foreign return if required).

Essential Forms

  • SA100: Main tax return form.
  • SA102: Employment pages (one per foreign employment; report gross income, benefits, expenses).
  • SA106: Foreign pages (for claiming FTCR on foreign tax paid; include country code, gross income, tax paid in GBP).
  • SA109: Residence, remittance basis etc. pages (if non-UK domiciled, claiming remittance basis, OWR, or split-year treatment).
  • Helpsheet HS263: Relief for foreign tax paid (working sheet for calculating FTCR if doing it yourself).
  • Helpsheet HS264: Remittance basis (if applicable).

Income and Payment Evidence

  • Payslips or wage statements from the foreign employer (showing gross pay, deductions, tax withheld, in foreign currency and dates paid).
  • Foreign equivalent of P60/P45 (end-of-year tax certificate, e.g., US W-2, German Lohnsteuerbescheinigung) detailing annual earnings, tax paid, and social security contributions.
  • Employment contract or offer letter (detailing salary, bonuses, benefits, duties location, and any tax equalization clauses).
  • Bank statements (showing receipt of salary, remittances to UK if on remittance basis, with transaction dates and amounts).
  • Invoices or receipts for any employment-related expenses claimed (e.g., travel, tools; must be allowable under UK rules).

Tax and Relief Evidence

  • Foreign tax withholding certificates or payment receipts (proof of tax paid abroad, including amounts and dates).
  • Copy of foreign tax return filed (if required for FTCR; shows all allowances/reliefs claimed to ensure ‘minimum’ tax paid).
  • Foreign tax assessment notice (from foreign tax authority, confirming final tax liability).
  • DTA reference (printout of relevant UK-foreign country DTA from www.gov.uk/government/collections/tax-treaties).
  • Exchange rate documentation (e.g., HMRC annual rates from www.gov.uk/government/publications/exchange-rates-for-customs-and-vat-yearly, or spot rates from OANDA/XE on payment/remittance dates; used to convert to GBP).

Residence and Other Supporting Evidence

  • Passport stamps, travel itineraries, or visa documents (to prove days spent in UK/abroad for SRT or split-year).
  • Proof of domicile (e.g., birth certificate, family ties documents if claiming non-UK domicile for remittance basis/OWR).
  • Records of remittances (e.g., wire transfer confirmations, dates, and amounts if on remittance basis).
  • Any correspondence with HMRC or foreign tax authorities (e.g., prior agreements on small income exemptions).

Keep all in organized files (digital or paper). If HMRC enquires, provide within 30 days. For complex cases (e.g., DTAs, OWR), consider professional help to avoid errors.

HMRC’s Basis Period Reform: understanding and calculating transition profits

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Transition profits (also called “transition part profits”) arise from the UK government’s Basis Period Reform, which changed how self-employed individuals and partners in partnerships calculate their taxable profits for Income Tax. Before the reform, businesses could base their taxable profits on accounting periods that didn’t align with the UK tax year (6 April to 5 April). The reform mandates that, from the 2024-25 tax year onward, all unincorporated businesses (sole traders and partnerships) must use a “tax year basis” for taxing profits—meaning profits are taxed based on what arises in the tax year itself, regardless of the accounting date.

The 2023-24 tax year was the “transitional year” where businesses with non-aligned accounting dates had an extended basis period (potentially longer than 12 months). This extension created “transition profits”: the extra profits in the extended period that wouldn’t have been taxed under the old rules. These profits are taxed separately over multiple years to spread the burden.

Eligibility

  • Applies to self-employed sole traders and partners in partnerships (including LLPs) who:
    • Started their business or joined the partnership before 6 April 2023.
    • Had an accounting year-end date not falling on or between 31 March and 5 April (i.e., not aligned with the tax year).
  • Does not apply if:
    • Your accounting date was already aligned.
    • You started business after 5 April 2023.
    • It’s non-trading income (e.g., property or investment income in partnerships).
  • For partnerships: Only trading or professional profits are affected. Each partner’s share is calculated individually based on the Partnership Statement from the partnership’s tax return (SA850). If you joined before 6 April 2022, you’re likely affected.

If you’re unsure, check HMRC Helpsheet HS222 (“How to calculate your taxable profits”) or use HMRC’s online transition profit calculator (not available for complex cases like multiple accounting periods or partnerships with non-trading income).

Step-by-Step Calculation of Transition Profits

Transition profits are calculated once in the 2023-24 tax year (the transitional year). You don’t recalculate them annually; you just spread the remaining amount. Use Working Sheet 3 from HS222 or the HMRC guidance for this.

  1. Identify the Basis Period for 2023-24:
    • The basis period runs from the day after your 2022-23 basis period ended until 5 April 2024 (or your accounting date in 2023-24 if it’s between 31 March and 4 April 2024).
    • Split into:
      • Standard part: The first 12 months (equivalent to a normal basis period).
      • Transition part: The remaining period after the standard part, up to 5 April 2024 (this creates the “extra” profits).
  2. Apportion Profits from Your Accounts:
    • Use your business accounts that overlap the standard and transition parts.
    • Apportion profits proportionally:
      • By days (recommended for accuracy): Profit in part = Total accounting period profit × (Days in part ÷ Total days in accounting period).
        • Include leap day (29 February 2024) if applicable.
      • By months or weeks: If days are impractical, but must be consistent.
    • Adjust for allowable expenses, capital allowances, and other tax adjustments (e.g., private use) as normal.
    • For partnerships: Use the partnership’s overall profits, then apply your profit-sharing ratio to get your share.
  3. Calculate Gross Transition Profits:
    • Sum the apportioned profits for the transition part.
    • Deduct any losses from the standard part (these offset the transition profits first).
  4. Deduct Overlap Relief:
    • Overlap relief is any previously “doubled-up” profits from earlier years (e.g., when you started business or changed accounting dates).
    • Deduct it fully from the transition profits (it can’t be carried forward beyond 2023-24).
    • If unknown, estimate provisionally and amend your return later.
    • Formula: Transition profits = (Apportioned transition part profits – Standard part losses) – Overlap relief.
    • If this results in a negative (loss), no transition profits arise, and the loss can be carried forward as usual.

Example Calculation (from HMRC Guidance)

  • Your accounting period: 1 October 2022 to 30 September 2023 (profit £45,000); 1 October 2023 to 30 September 2024 (profit £75,000).
  • Standard part: 1 October 2022 to 30 September 2023 = £45,000 (all from first accounts).
  • Transition part: 1 October 2023 to 5 April 2024 (188 days out of 366 in second accounts) = £75,000 × (188 ÷ 366) ≈ £38,525.
  • Assume overlap relief: £10,000.
  • No standard losses.
  • Transition profits = £38,525 – £10,000 = £28,525.
  • For a partnership: If your share is 50%, your transition profits = £14,262.50.

Another example (monthly apportionment):

  • Accounts: 1 January 2023 to 31 December 2023 (£50,000 profit); 1 January 2024 to 31 December 2024 (£15,000 profit).
  • Standard part: Full first accounts = £50,000.
  • Transition part: 1 January 2024 to 5 April 2024 (3/12 months) = £15,000 × (3 ÷ 12) = £3,750.
  • Overlap relief: £1,000.
  • Transition profits = £3,750 – £1,000 = £2,750.

Spreading Transition Profits for Taxation

  • Total transition profits are spread over 5 tax years (2023-24 to 2027-28) to avoid a large one-off tax bill.
  • Minimum in 2023-24: At least 20% of the total transition profits (after losses and overlap relief).
  • Remaining amount: Spread equally over the next 4 years (2024-25 to 2027-28), i.e., one-quarter of the remaining each year.
    • If no acceleration in 2023-24: 20% in 2023-24, then 20% of original each subsequent year (since remaining 80% ÷ 4 = 20%).
    • HMRC phrases it as “25% of the remaining transition profits” for 2024-25 onward, but this means one-quarter of the untaxed remainder at that point (ensuring equal spread).
  • If the business ceases before 2027-28, the full remaining amount is taxed in the cessation year.
  • For partnerships: Report your share in Box 16.3 (SA104F full pages) or equivalent. Do not include in Box 9 (basis period adjustment).
  • Losses: Brought-forward losses from earlier years can offset the spread amount each year (up to the spread for that year—Box 16.4 in SA104F). Current-year losses cannot offset transition profits.
  • Averaging (e.g., for farmers/artists): Transition profits are excluded from averaging claims.

Acceleration Options

  • You can elect to accelerate taxation of more than the minimum in any year (e.g., to use allowances or lower tax rates).
  • How: Enter the higher amount (e.g., standard spread + accelerated) in Box 16.3 (partnerships) or equivalent on your Self Assessment return. Provide full details (including accelerated amount) in the “Any other information” box (page TR 7).
  • This reduces the spread in future years proportionally.
  • No reversal once elected.
  • Mandatory acceleration if business ceases early.

For 2024-25 Specifically

  • This is the second year of spreading.
  • Enter 25% of the remaining untaxed transition profits (after 2023-24 amount) in Box 16.3 (SA104F) or calculate via HS222 Working Sheet.
  • If you accelerated in 2023-24, adjust the remaining downward.
  • Partnerships: Use the latest Partnership Statement; if multiple, adjust in Box 9 but exclude transition profits there.
  • If no transition profits were taxed in 2023-24 (e.g., due to losses), spread the full amount over 4 years at 25% each.

How Transition Profits Affect Your Overall Tax Calculation

From the Tax Calculation Summary (SA110 notes):

  • Transition profits are added to your non-savings income (e.g., Box A43 in the working sheet) as a separate charge.
  • To calculate the tax due on them:
    1. Run the full tax calculation worksheet (Sections 1-12) with the transition amount included in non-savings income (up to Box A240—total tax due).
    2. Run it again without the transition amount (get a second A240 figure).
    3. The difference between the two A240 figures is the tax due on the transition profits.
  • This ensures the tax is calculated at your marginal rate, after allowances and other income.
  • Copy to the relevant boxes on SA110 and add to your total tax liability.

Key Tips and Resources

  • Keep records of your calculation, spread amounts, and elections for future returns (amendable up to 12 months after filing).
  • Provisional figures: Allowed if disputing or estimating (e.g., overlap); mark on return and amend by 31 January 2027 for 2024-25.
  • Penalties: Inaccurate reporting can lead to penalties (30-100% of tax due).
  • Further help: HMRC Helpsheet HS222 (includes Working Sheets); HS227 for losses. Search gov.uk for “basis period reform” or use the online calculator. For partnerships, refer to SA104F/S notes and SA850 guidance.
  • If complex (e.g., multiple periods), consult a tax advisor—HMRC won’t calculate for you if you miss deadlines (paper by 31 Oct 2025; online by 31 Jan 2026 for 2024-25).

Reporting self-employment income for tax

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A taxpayer is liable for tax on self-employment income if they meet any of the following, based solely on self-employment receipts (total income before expenses, including turnover, other business income, balancing charges, and goods/services for own use):

  • Total receipts exceed £1,000: Receipts up to £1,000 are exempt via the trading income allowance and do not require reporting, unless from a connected party (e.g., family or related business). If over £1,000, you must file a return and either claim the £1,000 allowance (no expenses or other allowances deductible) or deduct allowable expenses/capital allowances to calculate taxable profits. You cannot claim the allowance to create a loss. The allowance can be split across multiple self-employments but caps at £1,000 total.
  • Voluntary filing even if under £1,000: You must file if you want to voluntarily pay Class 2 National Insurance contributions (NICs) to maintain entitlement to benefits like State Pension, preserve your self-employment record (e.g., for Maternity Allowance), claim Tax Free Childcare based on self-employment income, or reclaim CIS deductions as a subcontractor.
  • No need to file if under thresholds and no voluntary reasons: If total receipts ≤£1,000 (not from connected parties) and no voluntary NICs or other claims, check if a return is needed via www.gov.uk/check-if-you-need-a-tax-return. If not, notify HMRC by 31 January 2026 to avoid penalties.
  • Registration requirement: If you started self-employment between 6 April 2024 and 5 April 2025 and have not registered, do so immediately via www.gov.uk/register-for-self-assessment/self-employed. If you ceased before 6 April 2025, notify via www.gov.uk/stop-being-self-employed to correct NICs and avoid overpaying tax.
  • Special cases triggering liability:
    • Foster/Shared Lives carers: If qualifying care receipts exceed your qualifying amount (calculated via Helpsheet 236), you are liable; use simplified method or full calculation.
    • Rent-a-Room scheme: If gross receipts from furnished accommodation in your home ≤£7,500 (£3,750 if shared), no liability and no need to complete most boxes; if over, liable unless using the scheme (which caps relief at £7,500/£3,750, no expenses/capital allowances/trading allowance claimable).
    • Managing Serious Defaulters (MSD) programme: If in this during the year, liable and must use full pages.
    • Overseas business: If all business abroad and using remittance basis, limited boxes apply; if any UK business, full arising basis applies.

If none apply and you believe no return is needed, confirm via the checker tool.

Impact of Different Income Thresholds

Thresholds directly affect form choice, allowances, and tax rates (self-employment profits treated as non-savings income in tax calculation):

  • £1,000 (Trading Income Allowance): Exempt if ≤ this; over requires filing. Impacts: Cannot deduct expenses if claimed; no loss creation. For tax calculation, reduces taxable non-savings income.
  • £90,000 (Turnover Threshold for Short vs. Full Pages): If turnover <£90,000 (or would be if full year), use short pages. If ≥£90,000, or if accounting period not 12 months/ending in tax year, basis change with adjustment income, need to adjust Class 4 NICs profits, or in MSD, use full pages. Impacts: Full pages required for complex adjustments; short for simpler cases.
  • Tax Bands for Self-Employment Profits (Non-Savings Income): After deductions/allowances, profits are taxed in UK bands (assuming non-Scottish resident; Scottish rates differ but model assumes UK as PDFs focus on general):
    • First £37,700: 20% (basic rate).
    • Next £87,440: 40% (higher rate).
    • Over £125,140: 45% (additional rate).
    • Personal Allowance (£12,570 standard) reduces taxable income but tapers if adjusted net income >£100,000 (see Section 13 of tax calculation). No savings/dividend allowances apply as only self-employment considered.
    • If profits create losses, carry forward or set against other income (but model limits to self-employment only).
  • NICs Thresholds: Class 2 voluntary if profits <£6,725; mandatory if ≥£6,725 (flat rate). Class 4: 9% on profits £12,570-£50,270; 2% over £50,270. Impacts filing if voluntary.
  • Other Thresholds: £7,500 Rent-a-Room (as above). For tax calculation, if income >£100,000, Personal Allowance reduces by £1 for every £2 over (zero at £125,140). High Income Child Benefit Charge if >£50,000, but not applicable here as only self-employment.

Use cash basis (money in/out) unless opting for traditional accounting (accruals). If changing basis, transitional adjustment may apply.

Information to Put in Every Box (Self-Employment Pages)

Determine form: Use SA103S (Short) if turnover <£90,000 and no complex adjustments; SA103F (Full) otherwise. Print from gov.uk and enter name/UTR (10-digit number from HMRC letters) at top if not pre-printed. For tax calculation (SA110), enter self-employment profits as non-savings income in Section 1.

SA103S (Short Pages) Boxes
  • Box 1 (Description of business): Enter business type (e.g., “Plumber”, “Qualifying carer” for foster carers, “Rent-a-Room” if using scheme).
  • Box 4 (If you are a foster carer or shared lives carer): Put ‘X’ if applicable; if qualifying amount > receipts, put ‘0’ in Box 31 and stop; otherwise proceed.
  • Box 5 (If your business started after 5 April 2024, enter the start date): Enter DD MM YYYY (e.g., 15 05 2024).
  • Box 6 (If your business ceased before 6 April 2025, enter the final date of trading): Enter DD MM YYYY (not end-of-year date).
  • Box 7 (Date your books or accounts are made up to): Enter usual annual date (DD MM YYYY, e.g., 05 04 2025); must be after 31 March 2024 and before 6 April 2025, else use full pages.
  • Box 8 (Traditional accounting): Put ‘X’ if using accruals basis (not cash basis).
  • Box 9 (Your turnover): Enter total income received/earned before expenses (include cash/card/cheques, tips/commissions, payments in kind, money owed if traditional accounting, full CIS amounts if subcontractor). For Rent-a-Room over limit: gross receipts including services.
  • Box 10 (Any other business income): Enter trading income not in turnover (e.g., subletting business space, non-arm’s length reverse premiums, third-party trading income).
  • Box 10.1 (Trading income allowance): Enter up to £1,000 if claiming (against total receipts); cannot exceed receipts or create loss. Leave blank if deducting expenses instead.
  • Boxes 21, 28, 31 (For specific claims, e.g., Tax Free Childcare or simplified foster care): Enter as directed (e.g., Box 21: expenses if not claiming allowance; Box 28: capital allowances; Box 31: taxable profit/loss).
  • Box 36 (Voluntary Class 2 NICs): Put ‘X’ if paying voluntarily for benefits.
  • Box 38 (CIS deductions reclaim): Enter amount to reclaim if subcontractor.

For low-turnover cases (e.g., expect >£1,000 next year or voluntary NICs): Complete only Boxes 1-8 (and ‘X’ in 36 if applicable). For Rent-a-Room under limit: Only Box 1. Provisional: Only Boxes 1,5,9,10,21/22,28,31/32.

SA103F (Full Pages) Boxes
  • Box 1 (Business name): Enter full business name (unless your own name).
  • Box 2 (Description of business): Enter business type (e.g., “Qualifying carer” for foster carers, “Rent-a-Room” if using scheme).
  • Box 6 (If your business started after 5 April 2024): Enter DD MM YYYY.
  • Box 7 (If your business ceased after 5 April 2024 but before 6 April 2025): Enter DD MM YYYY (not end-of-year).
  • Box 8 (Date your books or accounts start – the beginning of your accounting period): Enter DD MM YYYY (usually day after prior period end; or start date if new).
  • Box 9 (Date your books or accounts are made up to or the end of your accounting period): Enter DD MM YYYY (usual annual date; or cease/start date if applicable).
  • Box 10 (Traditional accounting): Put ‘X’ if using accruals (not cash basis).
  • Box 13 (Foster carer flag): Put ‘X’ if qualifying carer; if amount > receipts, put ‘0’ in Box 76 and stop.
  • Box 14 (Other details, if applicable): Enter if MSD or similar.
  • Box 15 (Total receipts/turnover): Enter total income before expenses (similar to short Box 9; for foster carers: total receipts).
  • Box 16 (Other business income): Enter as short Box 10.
  • Box 16.1 (Trading income allowance): Enter up to £1,000 if claiming.
  • Box 30 (Rent-a-Room relief if over limit): Enter £7,500 (£3,750 if shared).
  • Box 31 (Qualifying amount for foster carers): Enter if using simplified method.
  • Box 47/48, 64/65 (Profit/loss): Enter net after expenses/allowances.
  • Box 59 (Balancing charges): Enter if applicable (e.g., Rent-a-Room).
  • Box 60 (Goods and services for own use): Enter value.
  • Box 68 (Adjustments, e.g., for basis period): Enter if period not standard.
  • Box 73 (Taxable profit): Enter final.
  • Box 76 (Taxable profit or loss): Enter ‘0’ if no profit; for overseas: limited.
  • Box 101 (Class 4 NICs adjustments): Enter if needed.

For multiple accounts: Repeat for each, consolidate recent. Provisional: Only Boxes 1-16, 47/48, 64/65, 73, 76/77 (plus 73.3/73.4/74 if applicable). For Rent-a-Room under limit: Only Boxes 1-2; over: Boxes 1-10,15,30,59.

Tax Calculation Summary (SA110) Working Sheet

Enter self-employment taxable profits (from short Box 31 or full Box 76) as non-savings income in Section 1. Complete sections sequentially:

  • Section 1: Add profits here (non-savings/lump sums).
  • Section 4: Deduct allowances (e.g., Personal Allowance via Section 13 if >£100,000 income).
  • Section 5: Taxable income = profits minus allowances.
  • Section 6: Allocate to bands (e.g., first £37,700 at 20%).
  • Section 7: Calculate tax due.
  • Section 15: Add Class 2/4 NICs (thresholds as above).
  • Other sections: Skip if no savings/dividends/gains/etc.

If transition profits from 2023-24 basis reform: Calculate twice (with/without in Section 1) for separate charge.

Checklist of Documents, Evidences, Receipts, Invoices, and Forms Needed to Submit a Tax Return Correctly

Do not submit any documents with your return unless HMRC asks; keep for records (at least 22 months after tax year end, or longer if enquiry). Checklist for preparation/submission:

  • Records of income/expenses: Receipts/invoices for all turnover (e.g., sales invoices, bank statements for cash/card payments), other income, balancing charges, goods for own use.
  • Expense evidences: Invoices/receipts for allowable expenses (e.g., costs deducted if not claiming trading allowance).
  • Accounts/books: Prepared accounts (cash or traditional basis) showing profit/loss calculation; if provisional, note reasons.
  • CIS statements: If subcontractor, forms showing deductions to reclaim.
  • Helpsheets: HS236 (foster carers), HS222 (profits calculation), HS223/HS229 (Rent-a-Room/other).
  • UTR confirmation: Letters/emails from HMRC with your 10-digit UTR.
  • Registration proof: If new, confirmation from www.gov.uk/register-for-self-assessment.
  • NICs evidence: If voluntary Class 2, records supporting benefit entitlement (e.g., State Pension gaps).
  • Forms to submit: Completed SA100 (main return) + SA103S or SA103F + SA110 (if calculating yourself). No attachments required for submission.

A numerical example of how self-assessment liability is calculated

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Here’s a numerical example showing how HMRC calculates your expected liability under Self Assessment

 Example: Calculating Expected Liability

Background

  • Your total tax and Class 4 National Insurance liability for 2023/24 (after PAYE and other credits) = £12,000.
  • You are self-employed and still trading in 2024/25, so HMRC assumes your next year’s liability will be roughly the same.

Step 1 – Work out the payments on account

Expected liability for 2024/25 is based on 100% of the previous year’s liability, split into two instalments:

[£12,000 × 50% = £6,000 \text{ per instalment}]

  • 1st Payment on Account (POA) – due 31 January 2025 = £6,000
  • 2nd Payment on Account (POA) – due 31 July 2025 = £6,000

You will therefore have paid £12,000 on account by 31 July 2025.

Step 2 – File the 2024/25 tax return

Suppose your actual tax liability for 2024/25 turns out to be £13,500.

Step 3 – Work out the balancing payment

[Actual liability (£13,500)} − \text{Payments on account (£12,000)} = £1,500]

That £1,500 is your balancing payment, due 31 January 2026.

Step 4 – Calculate next year’s payments on account

HMRC will now base your 2025/26 expected liability on this latest figure (£13,500), unless you claim to reduce it.

[£13,500 × 50% = £6,750 \text{ per instalment}]

So your next two payments on account will each be £6,750, due 31 January 2026 and 31 July 2026.

Step 5 – If your income drops

If you know your 2025/26 profits will be lower, you can apply to reduce your payments on account.
For example, if you expect your liability to fall to £10,000, you can claim to reduce each POA to:

[£10,000 × 50% = £5,000]

 If you reduce too much and end up owing more, HMRC will charge interest on the shortfall.