Do I need to file a Self Assessment tax return and what if I’ve received a COVID-19 grant?
More than 12m people file a Self Assessment tax return each year, which is almost a fifth of the UK population. They include sole-trader bricklayers, plumbers and plasterers, as well as hairdressers, cake makers and chefs, and self-employed tutors, translators and tattoo artists. People of all occupations, trades and backgrounds work for themselves.
Sole traders are key to the UK economy. They’re the unsung heroes who make up about 59% (3.5m) of the total UK business population of 5.9m and they of course include many freelancers, contractors and agency workers.
Many other people also need to fill out and file a Self Assessment tax return to report taxable income and in recent years, many UK sole traders have received taxable COVID-19 grants and support payments from government and other sources that must also be reported via Self Assessment. This guide provides an overview of who must sign up to Self Assessment and how they should report COVID-19 grants and support payments.
Here’s what we’ll cover
- Who must file a Self Assessment tax return?
- How to register for Self Assessment.
- How to report taxable COVID-19 grants and support payments.
- Sources of advice and support.
Who must file a Self Assessment tax return?
Self Assessment is the system the UK tax authority HMRC uses to collect Income Tax. You need to register for Self Assessment and file an SA100 tax return if you:
- have earned more than £2,500 from renting out property
- or your partner have received Child Benefit and either of you has an annual income of more than £50,000
- have received more than £2,500 in other untaxed income (eg tips or commission)
- are self-employed (ie a sole trader) with an annual turnover of more than £1,000
- are a partner in an ordinary business partnership
- are an employee claiming expenses worth more than £2,500 a year
- have earned taxable income from savings, investments or dividends
- have earned income from abroad that is subject to UK tax (eg renting out a property overseas while domicile in the UK).
- If you’re still not sure, HMRC provides an online tool that you can use to check whether you need to file a Self Assessment tax return.
Need to know!
- If you need to file a Self Assessment tax return, you do so after the relevant tax year ends on 5 April and you have until the following 31 January to file it online (although it’s best to do it sooner). First you must register for Self Assessment.
How to register for Self Assessment
It’s simple and relatively quick to register online for Self Assessment. When registering you’ll need to give your:
- National Insurance number
- full name (and any previous names)
- current address (and when you moved in)
- date of birth
- gender
- phone number
- email address and
- whether you’ve registered previously for Self Assessment.
You’ll also be asked for basic information about your new sole trader business, if that what you’re doing. After you’ve completed the questions, HMRC will create an account for you. You’ll then receive a letter with your Unique Taxpayer Reference (UTR) number within 10 days (21 if you’re based overseas). You’ll need your UTR to file your Self Assessment tax return. You’ll also then receive another letter with an account activation code. Once activated, you can file your tax return online at any time before the deadline.
Need to know!
- Registration rules are slightly different if you’ve registered as self-employed before or if you’re not self-employed or if you want to register as a partner or partnership.
Reporting COVID-19 grants and support payments
To help some self-employed people to stay afloat during the COVID-19 pandemic when they couldn’t work, the government introduced a range of business-support measures, including SEISS (the Self-Employment Income Support Scheme), which began in May 2020. Five rounds of SEISS grants were awarded and the application deadline date for the last one was 30 September 2021.
Other COVID-19 grants and support payments included:
- test and trace or self-isolation payments in England, Scotland and Wales
- the Coronavirus Job Retention Scheme (CJRS)
- Eat Out to Help Out
- the Coronavirus Statutory Sick Pay Rebate and
- Coronavirus Business Support Grants (government website Gov.uk provides a comprehensive list of COVID-19 business-support schemes and grants).
As a sole trader or member of an ordinary business partnership, you may have received COVID-19 grant funding and/or support payments, which you now need to tell HMRC about if it is taxable. Thankfully, it’s straightforward.
- Detail any SEISS payments received in the Self-Employment Income Support Scheme Grant box on your Self Assessment tax return (SA100).
- Record all other taxable COVID-19 payments in the box for any other business income.
If you’re self-employed, HMRC has published guidance on reporting COVID-19 grants and support payments (choose from short or full notes). Short and full guidance is also available online for members of ordinary partnerships who need to report COVID-19 grants and support payments via Self Assessment.
Sources of support
- If you’re not sure if a COVID-19 support payment you received is taxable or need more advice on reporting it to HMRC, you can contact the Coronavirus (COVID-19) helpline or a professional tax adviser.
- HMRC has published a comprehensive range of Self Assessment guidance, including concise YouTube Self Assessment videos and live and recorded webinars (registration required).
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