How to file a tax return
There are benefits to filing your tax return early. We share our step-by-step guide.
Do I need to file a tax return, when is the deadline, and how do I do it? These are all common questions for those filing a tax return for the first time.
You might think tax returns are only for the self-employed, landlords and high-net-worth individuals, but more people than ever will need to complete a self-assessment tax return this year.
Fiscal drag is largely to blame, thanks to frozen tax thresholds.
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The dividend and capital gains tax allowances have also been slashed twice since 2022, meaning those with investments held outside an ISA will find themselves paying more tax.
Higher interest rates could also mean some savers find themselves exceeding the annual savings allowance, resulting in a tax bill on their savings interest, if earned outside an ISA.
While the tax return deadline is not for several months – 31 October 2025 for those who file by post and 31 January 2026 for those who file online – it is worth getting your paperwork in order early.
Last year, 300,000 people gave themselves peace of mind by filing their tax return in the first week of the new tax year. There are other benefits to filing early too, including the ability to pay your tax bill in instalments.
“Getting that return finished early can be an effective way to keep a personal budget on track. No one wants to be hit with a large tax bill at the end of January, just weeks after the extra expense that comes with the festive period,” said Alice Haine, personal finance analyst at investment platform Bestinvest.
“If you have tax to pay, you can spread the payments over the next nine months to make them more manageable. So rather than paying a lump sum in one go, you can drip them in slowly to ensure your cashflow and any savings plans don’t get impacted in a single month.”
Who needs to file a tax return?
A common reason for falling foul of the taxman is simply not knowing that tax was due.
If your only source of income is your salary and you are not self-employed, then you probably don’t need to file a tax return. Income tax will be deducted from your salary before you receive it through a process called “pay as you earn” (PAYE).
Most pensioners won’t need to file a tax return either if their only source of income is their state and private pensions. The state pension is currently lower than the personal allowance. If private pension income tips you over the £12,570 threshold, income tax will usually be deducted through PAYE.
However, if you also earn income from savings, investments, a business, a second home, or another source, then it is likely that you will need to file a self-assessment tax return. The same is true if you are self-employed. We take a closer look at the rules.
Business owners and the self-employed
If you run your own business or work for yourself, you will need to file a tax return. This becomes a requirement once you earn more than £1,000 (before taking off anything you can claim tax relief on). You will also need to complete a tax return if you are a partner in a business.
Tax on savings
Most people can earn a certain amount of interest on their savings without having to pay any tax at all. However, with interest rates having risen to higher levels in recent years, you might be surprised at how quickly you can exceed this threshold.
A basic-rate taxpayer with a 5% savings account could become liable for a tax bill once their savings pot hits £20,000, if the money is held outside of an ISA. Any savings held within an ISA are tax-free, regardless of the amount of interest you earn.
Rules for savings held outside an ISA
- If you are a basic-rate taxpayer, then you are entitled to earn up to £1,000 in tax-free interest. This is called the personal savings allowance. This falls to £500 for higher-rate taxpayers, while additional-rate taxpayers aren’t entitled to any personal savings allowance at all.
- You can also use your personal allowance (£12,570) to earn interest tax-free if you haven’t already used it up on your wages, pension, or other income.
- There is an additional allowance of up to £5,000 if you are a low earner, also known as the starting rate for savings. You will only be entitled to the full amount if you earn less than £12,570, but will still qualify for some of it up to £17,570.
Once you exceed these thresholds, you will need to file a tax return.
Tax on investments
Most investments are subject to income and capital gains tax if they are held outside an ISA. The capital gains and dividend allowances are currently £3,000 and £500, having been cut twice in recent years.
If you exceeded the thresholds for the 2024/25 tax year, or the total amount you sold the assets for was more than £50,000, you will need to complete a tax return.
It is worth remembering that capital gains tax is paid on investments once they have been sold. You are able to deduct any losses to help lower your capital gains tax bill.
Tax on rental income
If you own a property that you rent out, you will probably need to pay tax on any rental income. The rules vary depending on whether you own the property personally, or run a property business.
The following rules apply if you own the property personally:
- If you earn between £1,000 and £2,500 a year, you need to contact HMRC.
- If you earn more than £2,500 after allowable expenses, or more than £10,000 before allowable expenses, you need to complete a tax return. Allowable expenses include things like letting agents’ fees, maintenance and repair costs, ground rent, and gardening fees.
- You can claim the first £1,000 of rental income tax-free (known as the property allowance). However, if you claim this, you cannot claim a deduction for your expenses.
- Rental income is taxed at the same rate you pay on other forms of income, such as your salary.
If you have multiple properties and run them as a buy-to-let company, there are different rules. The rental income should be counted in the same way as any other business income. Further information can be found on the government website.
Parents who pay the child benefit charge
If you receive child benefit but aren’t eligible for the full amount, then you need to return the excess by completing a tax return.
The threshold for child benefit payments is currently £60,000. If you or your partner’s salary exceeds this amount (individually, not jointly), you will have to pay back 1% for every £200 of income you earn over the amount.
The government’s child benefit calculator can help you understand how much you need to repay, if any.
The good news is the rules are changing later this year. Chancellor Rachel Reeves has announced a new digital service will be launched this summer, giving families the option to repay the charge through their PAYE tax code instead.
Those making £1,000 through side hustles like eBay or Vinted
If you make a bit of money on the side by selling things on sites like eBay, Etsy or Vinted, you may need to declare this income – but the rules are complex:
- Firstly, you only need to declare the income if you make more than £1,000 through the side hustle in the tax year.
- Secondly, if you are selling personal items for less money than you originally paid, you do not need to declare the income – even if the annual total exceeds £1,000. Essentially, this means income tax will only be due if you are deemed to be trading.
- When it comes to personal items, the only exception is if you sell an item for more than £6,000 and make a profit. At this point, you probably won’t have to pay income tax but capital gains tax could be due. Further information is provided on the government website.
Those whose activities count as “trading” should be careful to stick to the rules. Alastair Douglas, chief executive at fintech company TotallyMoney, says: “While you might not think the taxman will catch up with you, these platforms are required to pass your information on if you’ve sold more than 30 items or earned more than £1,700.”
When filing your tax return, remember that you can list some expenses to help reduce the size of your bill. This includes things like the postage and envelopes you paid for when sending the products to the buyer. Remember to hold on to any evidence in case you need to prove these expenses.
Other untaxed income
HMRC points out that you may also need to complete a tax return if you received any other untaxed income, such as tips and commission or foreign income. If you are still not sure whether you need to complete a tax return, you can use HMRC’s online tool to help.
Does the taxman owe you money?
Sometimes, it is in your best interest to file a tax return, even if you don’t owe HMRC money. For example, if you are a higher or additional-rate taxpayer making contributions to a pension scheme, HMRC could actually owe you money in the form of pension tax relief.
All savers get the 20% basic-rate tax back automatically. However, if you are a higher or additional-rate taxpayer, you may need to claim the rest back yourself, depending on the type of pension scheme you are in:
- If you are in a “net pay” pension scheme where pension contributions are made before you are taxed, you will automatically receive any tax relief you are owed without having to claim it.
- However, if you are in a “relief at source” pension scheme (where contributions are made after tax is deducted), you may need to take action. Self-invested personal pensions (SIPPs) usually fall into this category.
Likewise, if you have started drawing from your pension pot and HMRC isn’t applying the correct tax code on your pension income (this is very common), then you can complete a tax return to claim a refund. Alternatively, you can avoid this overpayment in the first place by providing an up-to-date tax code or P45 to your pension provider before making your first withdrawal.
How to file a tax return: step-by-step guide
Filing a tax return can be a daunting task, but these are the key steps you need to take and the deadlines you need to note down in your calendar.
1. Register with HMRC
If you haven’t filed a tax return before, the first thing you need to do is register with HMRC. You will also need to do this if you registered with HMRC in previous years, but didn’t complete a tax return last year.
The registration deadline is earlier than the final filing deadline. You need to have registered by 5 October.
Once you have registered, you will receive your Unique Taxpayer Reference number. This can take up to 10 working days to receive by post, but you can usually see it sooner through the HMRC app or via your online HMRC account.
If you completed a tax return last year but don’t believe you need to do one this year, you need to let HMRC know as soon as possible so it can review your request.
2. Gather documents and complete the form
The tax return form asks for some personal information such as your name, address, date of birth, National Insurance number, 10-digit Unique Taxpayer Reference number, and your employer reference code (if you have one).
You should also collect any relevant documents and have them to hand when filling out the form. These could include your P60, bank statements, student loan statements, and any investment account statements.
The tax return form is divided into several sections which ask you to detail:
- Any income you received (e.g. through interest, dividends or your pension)
- Tax reliefs
- Student loan repayments
- Any money you owe as a result of the child benefit charge
- Any marriage allowance you would like to transfer to your spouse or civil partner
Depending on your circumstances, you may need to complete some separate supplementary pages. For example, you will need to do this if you are self-employed.
3. Submit your completed tax return
Once you have completed the form, submit your tax return. You will then receive a tax bill showing how much money you owe. If you submit your tax return online, this information will be generated instantly.
The deadline to file a paper tax return (i.e. by post) is 31 October. Those who file online have until 31 January.
4. Pay your tax bill
Once you have submitted your tax return, make sure to pay your tax bill by the 31 January deadline. You can pay online via the government website, or through the HMRC app. HMRC says paying through the app takes “less than a minute with immediate confirmation of payment”.
Late filers are charged an initial £100 penalty for missing the deadline by even one day (i.e. 1 February). After three months (1 May), you get hit with additional daily penalties of £10, up to a maximum of £900.
After six months, a further penalty applies – either 5% of the tax due or £300, whichever is greater. The same penalty (5% or £300) applies again once you are 12 months late.
There are also penalties for paying your bill late, even if you filed on time. These include 5% of the unpaid tax at 30 days, six months and 12 months. Interest is also charged at an eyewatering rate of 8.5% (base rate plus 4%).
“If you’re having difficulty paying, you might be able to agree a payment plan online with HMRC as long as you owe £30,000 or less,” says Charlene Young, pensions and savings expert at Hargreaves Lansdown. Further details can be found on the government website.
When thinking ahead to next year, consider filing your tax return early. One of the benefits is that this allows you to set up a budget payment plan to make weekly or monthly direct debit payments towards your bill.
How to get help with filing your tax return
HMRC says the quickest way to get help when filing your tax return is to use its online tools or chat with its digital assistant. As this is a chatbot, it should be able to help with standard queries but may struggle with more complex requests.
If the digital assistant is unable to help, you can ask to speak to a HMRC adviser if one is available.
Alternatively, you can call HMRC’s helpline on 0300 200 3310 if you are based in the UK. If you are located outside of the UK, call +44 161 931 9070 instead. The opening times are Monday to Friday, 8am to 6pm.
If your tax affairs are complex, it could be worth using an accountant. Bear in mind you may need to give them some notice, so it is worth doing this well ahead of the 31 January deadline each year.
What are “payments on account”?
Some people have to pay through a system known as “payments on account”. This applies to you if the amount of tax you owed last year was £1,000 or more, or if you didn’t pay at least 80% through your tax code.
Through this system, you pay your tax bill in advance in two instalments. The instalments you pay are just estimates, based on how much tax you paid in the previous year.
If you pay through this system, you should already have paid part of your tax bill for the 2024/25 tax year. The first instalment would have been paid by 31 January 2025, and the second will be due on 31 July 2025.
As these figures are just estimates, it is possible that there will still be a balance for you to pay once you have submitted your tax return form. Alternatively, HMRC may owe you money.
If you have underpaid, you will need to make a “balancing payment” by midnight on 31 January 2026. If you have overpaid, you will be able to claim a tax refund through the government website.
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Katie has a background in investment writing and is interested in everything to do with personal finance, politics, and investing. She enjoys translating complex topics into easy-to-understand stories to help people make the most of their money.
Katie believes investing shouldn’t be complicated, and that demystifying it can help normal people improve their lives.
Before joining the MoneyWeek team, Katie worked as an investment writer at Invesco, a global asset management firm. She joined the company as a graduate in 2019. While there, she wrote about the global economy, bond markets, alternative investments and UK equities.
Katie loves writing and studied English at the University of Cambridge. Outside of work, she enjoys going to the theatre, reading novels, travelling and trying new restaurants with friends.
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