Self Assessment tax return guide for contractors and company directors

If you’re self-employed, run your own company, or have other income that HMRC needs to know about, you’ll need to complete a Self Assessment tax return each year.

For most contractors, the process is relatively simple, particularly if you have an accountant who files the return for you.

This guide explains who must file, how to register, what to include, key deadlines and penalties, common mistakes to avoid, and how payments on account work.

Who needs to file

If you’ve left your permanent job behind, work out if your income will still be taxed at source, or if you need to join the millions who submit a return each year.

As an employee, your income tax is deducted by your employer and paid to HMRC on your behalf.

If you earn contract income upon which no tax has been deducted, you will need to declare this via the Self Assessment process and pay any taxes due directly to HMRC.

Limited company contractors

Being a director doesn’t automatically mean you have to file a Self Assessment tax return. If all you take is a small PAYE salary and HMRC hasn’t sent you a notice to file, you may not need to.

Most contractors, however, will also receive dividends from their company in addition to their salary.

Dividends are untaxed at source, so HMRC requires them to be reported on a tax return. From 25/26 tax year onwards, you need to provide further information about your shareholdings too.

You’ll also need to file if you have any other untaxed income, or if HMRC issues you with a notice to file (even if you don’t owe any tax).

Accountants usually handle this for you. Some firms include the director’s return in their fixed annual fee, while others treat it as an add-on and charge a separate one-off fee plus VAT.

It is possible to complete the return yourself through HMRC’s online service, but most contractors prefer to have their accountant handle it. It reduces the risk of errors, saves time, and means the responsibility for accuracy sits with a professional.

One important point: the fee for your personal Self Assessment return can’t be paid through your company. HMRC treats it as a personal cost, not a business expense.

Umbrella company contractors

If you contract via an umbrella company, you are taxed at source via PAYE and will not usually need to file a SATR, unless you have received untaxed income above certain thresholds.

See our dedicated guide: umbrella employees and Self Assessment.

You will typically need to register for Self Assessment if, for example:

• You received £2,500 or more in untaxed income (e.g. from renting out a property).
• You received £10,000 or more from savings or investments before tax.
• You (or your partner) receive Child Benefit and your income is over £60,000 (the High Income Child Benefit Charge applies on a taper and is fully withdrawn by £80,000). See our High Income Child Benefit Charge guide.
• You received foreign income taxable in the UK.
• You earned £150,000 or more during the tax year.
• You have untaxed income from trusts, settlements or estates.
• You have Capital Gains Tax to pay on disposals such as shares or a second property.

Some freelancers operate as sole traders. All self-employed individuals are required to complete an annual tax return, regardless of whether their business incurs a loss.

Registering for Self Assessment

If you’re a company director or an umbrella contractor with additional income to declare, the first step is to register for Self Assessment. Find out if you need to register here, or follow the official process on GOV.UK.

Once registered, HMRC will send you a Unique Taxpayer Reference (UTR). This is a 10-digit code you’ll need whenever you file a return, make a payment, or contact HMRC about Self Assessment. Keep it safe. If you lose it, you can request a copy from HMRC, but it can take time.

You should normally receive a notice to complete a tax return each year (usually in April or May). However, you are responsible for filing regardless — don’t assume that if HMRC doesn’t write to you, you are exempt.

Most people file online. To do so, you’ll need an activation code for your Government Gateway account. This is sent by post and usually takes around seven working days to arrive (longer if you’re abroad). You can’t use the online system until you’ve entered it, so avoid leaving registration until January.

You can still file a paper return (SA100), but the deadline is earlier — 31 October. Paper returns also require you to calculate much of the liability yourself, or wait for HMRC to post you a calculation, so the vast majority of contractors now use the online system.

What to include on your return

The complexity of your return depends on your circumstances. You may need to include:

• Income received from your primary employment (typically your own limited company).
• Any supplementary employment income (e.g. your final employer before contracting).
• Dividend income from your own company and any others.
• Income from property (e.g. rental income and allowable expenses).
• Income from investments, including pensions and interest on savings.
• Income from benefits.
• Child Benefit: if the High Income Child Benefit Charge applies — see our contractor’s HICBC guide.
• Gifts to charity if you are claiming tax relief.
• Any capital gains.

If you file online, HMRC calculates the tax due automatically. If you file on paper, HMRC will usually send you a calculation by post.

Deadlines and paying HMRC

• 5 October: register for Self Assessment if it’s your first time.
• 31 October: paper tax return deadline.
• 30 December: submit online if you want HMRC to collect up to £3,000 through your PAYE code.
• 31 January: online filing deadline and the date any tax is due in cleared funds.
• 31 January and 31 July: payments on account (if applicable).

Payments on account

Payments on account are advance payments towards your next year’s income tax, based on the amount you owed on your last return. They are paid in two equal instalments: the first by 31 January and the second by 31 July.

Example: if your total income tax liability for 2024/25 was £20,000, you must settle this by 31 January 2026.

HMRC presumes you will earn the same in 2025/26. You must therefore pay £10,000 on account on 31 January 2026 and £10,000 on 31 July 2026.

If your income is higher in the current year, you may also have a balancing payment due the following 31 January.

If your income is lower, you can ask HMRC to reduce payments on account via your online account or form SA303.

Exceptions: you will not make payments on account if your previous year’s bill was less than £1,000, or if 80% or more of your tax was already collected at source.

Read our full explainer: Self Assessment payments on account.

Penalties and interest

If you miss the filing deadline, you will automatically receive a £100 penalty. After this, you will be charged daily penalties of £10 per day up to 90 days (£900).

Additional penalties are levied at 6 months and 12 months. Interest and late payment penalties apply if you pay tax after 31 January.

For full details, examples, and reasonable-excuse guidance, see our dedicated guide to Self Assessment penalties and fines.

Common mistakes to avoid

Inaccurate figures

Double-check your salary, dividend and other income data. If your accountant files on your behalf, you are still responsible for accuracy. Never deliberately record inaccurate figures, as this could lead to significant penalties.

Missing the filing deadlines

Government systems allow you to save your return and return later, but do not forget to press ‘Send’. You have until 31 January after the tax year to submit online. The 31 January date is also the deadline to pay any tax due in cleared funds.

Not dating and signing paper returns

If you submit a paper return, sign and date it. Failure to sign can render the form invalid.

Missing supplementary pages

Include supplementary pages for additional income not covered by the main SA100, such as life insurance gains, share schemes, certain distributions, and other reliefs (e.g. EIS, VCT).

Mis-recorded UTR or NI number

Recording the wrong UTR or National Insurance number can invalidate your return. You can find your UTR on HMRC correspondence. Allow at least 7 to 10 working days for registration and activation codes.

Failure to declare all income

Declare all relevant income and capital gains: salary, dividends, benefits, pensions, rental income, savings interest, foreign income, employee share schemes, and gains.

Poor record-keeping

Keep key documents in one place:

• P60, P11D, P45 and benefit details.
• Student loan repayment information.
• Pension contributions and relief records.
• Employee share scheme records.
• Property income and allowable expense records.
• Details of Child Benefit received.
• Bank statements showing interest paid and any tax deducted.
• Dividend vouchers from your company and others.

Using an accountant vs DIY

Many contractor accountants include SATR completion in their package. Others charge a separate fee. A professional submission can reduce errors and save time. Remember, the cost is a personal expense and not a company expense.

FAQs

Do I need to file if all my income is PAYE through an umbrella?
Not usually, unless you cross other triggers such as untaxed property income, the High Income Child Benefit Charge, foreign income or capital gains. See our umbrella Self Assessment guide.

Can I claim my personal tax return fee as a business expense through my company?
No. It is a personal expense.

How do payments on account work if my income drops?
You can request a reduction via your HMRC online account or by filing form SA303. Interest may apply if you reduce too far.

Does HICBC apply if my partner claims Child Benefit?
Yes. The charge is based on the higher earner’s adjusted net income in your household. See our HICBC guide for contractors.

What if I file late but do not owe any tax?
The initial £100 late filing penalty can still apply even if no tax is due.