If you’re earning income in the UK, you may be wondering whether you need to register for self-assessment or if tax is automatically deducted through PAYE (Pay as You Earn). Getting this wrong could mean underpaying tax (leading to penalties) or overpaying tax without realising it.
This guide breaks down the differences between self-assessment and PAYE, who needs to register, and when it’s best to get professional help.
What is PAYE?
PAYE (Pay As You Earn) is the system HMRC uses to collect income tax and National Insurance directly from your salary or pension before it reaches you.
- You don’t need to submit a tax return if all your income is taxed through PAYE
- Your employer or pension provider deducts tax and sends it directly to HMRC
- You’ll receive a P60 or P45 each year showing how much tax has been paid
💡If you think you’re paying too much or too little tax under PAYE, check your tax code and speak to your Payroll department – errors can be common!
What is self-assessment?
Self-assessment is how HMRC collects tax from individuals who earn income that isn’t automatically taxed through PAYE
- You must register for self-assessment if you earn untaxed income
- You are responsible for calculating and paying your tax bill
- You must file a tax return each year by 31st January
Who needs to register for self-assessment?
You must register for self-assessment if:
- You’re self-employed and earn over £1,000 per year
- You’re a company owner receiving untaxed income (not solely PAYE)
- You’re a landlord earning rental income
- You earn more than £60,000 and receive child benefit (due to the High-Income Child Benefit Charge)
- You earn more than £150,000 annually (even if taxed via PAYE)
- You receive dividends, investment income, or foreign income
- You have a side hustle, freelance work, or gig economy earnings
💡 If you have a full-time job but also earn extra income, you may still need to file a tax return.
Who doesn’t need to register for self-assessment?
- You don’t need to file a self-assessment tax return if:
- You’re only employed and taxed through PAYE
- You earn under £1,000 from self-employment (covered by the trading allowance)
- You have no additional sources of untaxed income
- Your savings interest or dividends are below the tax-free allowance
What happens if you don’t register but should?
Failing to register for self-assessment when required can lead to:
- £100 late filing penalty if you miss the 31st January deadline
- Additional daily fines of £10 per day (up to £900) if over 3 months late
- Higher penalties if you fail to pay tax owed
💡 If you’re unsure whether you need to register, speaking to an accountant can save you from penalties and unexpected tax bills.
Should I speak to an accountant about my Self-Assessment Tax Return?
Navigating tax rules can be complex and getting it wrong can be expensive. A professional accountant can:
- Check if you need to register for self-assessment.
- Ensure you only pay the tax you owe (and not a penny more).
- Help you claim allowable expenses to reduce your tax bill.
- Submit your tax return accurately and on time.
Still unsure if you need to register for self-assessment?
Our tax experts at BAS Associates can review your situation and ensure you stay compliant while maximising savings. Contact us today!
