Most PAYE employees do not need to file a tax return, because their employer’s payroll already deducts the right income tax and National Insurance each pay period. You do need to file a Self Assessment return, however, if your income or circumstances cross one of HMRC’s specific triggers, such as earning above £100,000, receiving untaxed income, or being liable for the High Income Child Benefit Charge. The obligation is yours to spot: under Section 7 of the Taxes Management Act 1970, anyone chargeable to income tax or capital gains tax who hasn’t been sent a return must notify HMRC by 5 October after the tax year ends.1HM Revenue & Customs. Compliance Handbook CH123150 – Offshore Matters: Failing to Notify
Triggers That Require a PAYE Employee to File
PAYE covers a straightforward situation: one job, standard personal allowance, no significant income outside the payslip. Once your finances step beyond that, PAYE alone can’t settle the full bill. The common triggers for employees are:
- Total taxable income above £150,000. HMRC requires a Self Assessment return at this level regardless of how the income is earned.
- Income above £100,000. Your personal allowance tapers by £1 for every £2 earned above £100,000 and disappears entirely at £125,140, and HMRC typically requires Self Assessment to reconcile the reduced allowance.2GOV.UK. Income Tax Rates and Personal Allowances
- Self-employment income above £1,000. If you freelance or run a side business alongside your job and gross income exceeds the £1,000 trading allowance, you must file.3GOV.UK. Self Assessment Tax Returns – Who Must Send a Tax Return
- Rental income above the £1,000 property allowance.2GOV.UK. Income Tax Rates and Personal Allowances
- Untaxed income of £2,500 or more. Tips, commission, foreign income, or other earnings that haven’t had tax deducted through PAYE.
- Dividends or savings interest above your allowances. The personal savings allowance is £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. The dividend allowance is £500.4GOV.UK. Tax on Savings Interest – How Much Tax You Pay
- Capital gains above the annual exempt amount. The exempt amount for individuals is £3,000 for the 2025/26 tax year.5GOV.UK. Capital Gains Tax Rates and Allowances
- High Income Child Benefit Charge. If you or your partner claims Child Benefit and either of you earns above £60,000, the charge applies. You can pay through Self Assessment or ask HMRC to adjust your PAYE tax code.6GOV.UK. High Income Child Benefit Charge – Overview
- Employment expense claims over £2,500. Smaller claims can often be handled through your tax code.
If any of these apply and you don’t file, HMRC can charge penalties on top of the tax owed. Not knowing about a trigger is not a defence.
Registering If You’ve Never Filed Before
First-time filers must register with HMRC by 5 October following the end of the tax year they need to file for. If you started receiving rental income during the 2025/26 tax year (ending 5 April 2026), you must register by 5 October 2026.7GOV.UK. Check How to Register for Self Assessment
Registration happens online through GOV.UK. HMRC issues you a Unique Taxpayer Reference (UTR), which typically arrives by post within 10 working days. You’ll also need a sign-in for HMRC’s online services, either a Government Gateway user ID or a GOV.UK One Login account.8GOV.UK. HMRC Online Services – Sign In or Set Up an Account Don’t leave this until January. If your UTR hasn’t arrived in time, you can still miss the filing deadline, and HMRC still charges the penalty.
Filing and Payment Deadlines
Self Assessment runs on strict deadlines tied to the tax year ending 5 April:
- 31 October: Deadline for paper returns.
- 31 January (following year): Deadline for online returns and for paying any tax you owe.
For the 2025/26 tax year, your online return and payment are both due by 31 January 2027.9GOV.UK. Self Assessment Tax Returns – Deadlines Almost everyone files online. The paper deadline sits two months earlier and offers no advantage.
HMRC accepts several payment methods including online banking, direct debit, and debit card. You can also set up a budget payment plan to spread payments across the year rather than face one January bill.10GOV.UK. Pay Your Self Assessment Tax Bill – Make an Online or Telephone Bank Transfer
Payments on Account: The First-Year Surprise
This catches people out. If your Self Assessment bill is more than £1,000 and less than 80% of your total tax was collected through PAYE, HMRC requires advance payments toward next year’s bill. These are called payments on account, and each one is set at half of the previous year’s Self Assessment liability.
The first payment on account is due on 31 January alongside your balancing payment for the year just ended. The second falls due on 31 July.11GOV.UK. Pay Your Self Assessment Tax Bill – Overview In your first year of Self Assessment, this can mean a bill of up to 150% of a normal year’s tax on the same January deadline: the full amount owed for the past year plus the first 50% advance for the coming year.
If your income drops and you expect a lower bill, you can apply to reduce your payments on account. Cut them too far and HMRC charges interest on the shortfall.
Penalties for Late Filing and Late Payment
HMRC’s penalty structure escalates quickly:
- Day 1 after the deadline: An automatic £100 fine, even if you owe no tax.
- After 3 months: An additional £10 per day for up to 90 days, adding up to £900.
- After 6 months: A further penalty of 5% of the tax due or £300, whichever is greater.
- After 12 months: Another 5% of the tax due or £300, whichever is greater.
A return filed a year late with a £5,000 tax bill could rack up £1,600 or more in penalties alone.12GOV.UK. Self Assessment Tax Returns – Penalties
Late payment carries its own costs on top of late filing penalties. HMRC charges interest on any outstanding balance from the day after the deadline. The rate adjusts periodically and has been running at 8% per year as of late 2025. That daily interest compounds, so even a short delay adds up on larger balances.
When You Don’t Need a Return
Not every tax discrepancy calls for Self Assessment. HMRC has other ways to settle up with PAYE employees.
After the tax year ends, HMRC reviews PAYE records and sends a P800 tax calculation to anyone who has overpaid or underpaid. These letters go out between June and the following March.13GOV.UK. Tax Overpayments and Underpayments If you’ve overpaid, the P800 tells you how to claim a refund online. If you’ve underpaid a small amount, HMRC usually adjusts your tax code for the following year to collect it gradually.
In some cases HMRC issues a Simple Assessment instead, when you owe tax that can’t easily be collected through PAYE, such as tax on your State Pension or amounts over £3,000.14GOV.UK. Pay Your Simple Assessment Tax Bill – Overview A Simple Assessment tells you exactly what you owe and gives you a deadline to pay, without a full return.
You can check your tax code at any time through your HMRC personal tax account. Wrong tax codes are one of the most common reasons people overpay or underpay through PAYE. If you’ve changed jobs, started receiving a pension, or had a benefit added or removed, log in and make sure your code reflects your actual situation.15GOV.UK. Check Your Income Tax for the Current Year Fixing a wrong tax code mid-year prevents it from turning into a large underpayment or an unnecessary wait for a refund.