Starting a new business, taking on freelance clients or turning a side project into a income stream is an exciting milestone.
However, earning money outside a standard job comes with a new responsibility: tax.
If you earned untaxed income over the past tax year, there is an important date coming up fast on 5 October. Here is your simple, no-jargon guide to understanding what Self-Assessment is, whether you need to file, and what action you need to take.
What Is Self-Assessment?
If you have ever worked as an employee, you are likely used to PAYE (Pay As You Earn). That is the system where your employer automatically deducts tax and National Insurance from your paycheck before it hits your bank account.
Self-Assessment is the system HM Revenue & Customs (HMRC) uses to collect Income Tax from people whose income isn't taxed automatically at source.
Instead of an employer handling it for you, you "self-assess." This means you report your earnings and allowable business expenses to HMRC once a year so they can calculate what you owe (or what you get back).
Do You Need to File a Tax Return?
Many people assume Self-Assessment is only for large or full-time businesses, but it applies to anyone earning untaxed income.
You must register for Self-Assessment if any of the following applied to you between 6 April 2025 and 5 April 2026:
You were self-employed as a sole trader and earned more than £1,000 gross income across the entire tax year. (Note: This £1,000 threshold is for the whole tax year, NOT per month, and applies to total sales/income before taking off expenses).
You have a 9-to-5 job AND a side business: Even if you work full-time and pay tax through PAYE, if your side business or freelance work made over £1,000 gross in the tax year, you must register and file a tax return.
You were a partner in a business partnership.
You received property income If your income from renting a room in your residential home is over £7,500, you must report it using a Self Assessment tax return.
You had untaxed investment income, such as dividends or savings interest over your tax-free allowances.
You owe the High Income Child Benefit Charge: If you or your partner received Child Benefit and your individual adjusted net income was over £60,000 during the tax year, you must file a return to pay back the required charge. (If your income is between £60,000 and £80,000, you pay back a portion; if it is over £80,000, you pay back 100% of the benefit).
Tip: If your total self-employed or side-hustle gross income was £1,000 or less for the whole tax year, it falls under the UK's "Trading Allowance," meaning you do not need to report it or pay tax on it.
What Is the 5 October Deadline and What Needs to Be Done?
There is a common misconception that your full tax return must be submitted by 5 October. That is not true.
What you MUST do by 5 October: You simply need to register with HMRC and tell them that you earned untaxed income.
When you actually file and pay: You do not need to submit your tax numbers or pay your bill on 5 October. Your online tax return submission and final tax payment are not due until 31 January 2027.
Registering by 5 October gives HMRC enough time to set up your account and post your 10-digit Unique Taxpayer Reference (UTR), which you must have before you can submit your return in January.
What Happens If You Miss the Registration Deadline?
Failing to register by 5 October triggers what HMRC calls a "Failure to Notify" penalty.
If you register late and fail to pay your full tax bill by 31 January, HMRC can charge penalties based on a percentage of the tax you owe (ranging from 20% to 30% or more for unprompted delays).
Furthermore, if you miss the final 31 January filing deadline, HMRC issues an immediate £100 fine—even if you do not owe a single penny in tax.
Important Reminders Before You Start
Getting your UTR takes time: HMRC sends your UTR number by post, which can take up to two weeks. Don't leave registration until 4 October!
Check old login details: If you registered for Self-Assessment years ago, test your HMRC Government Gateway log-in today so you aren't locked out later.
Filing early doesn't mean paying early: If you file your tax return in October or November, you still don't have to pay your tax bill until 31 January. Filing early simply lets you know your exact numbers months in advance so you can budget comfortably.
Feeling Unsure About Your Next Step?
Navigating tax rules doesn't need to take up your evenings. If you aren't sure whether you hit the threshold, need help registering with HMRC, or want your bookkeeping organized from day one, we are here to help.
Reach out to the team at Femspire at hello@femspire.co.uk to book a free, no-strings.