Do I need to register for self-assessment?

If you’re earning extra income you might need to let the tax man know

For most people selling things online and earning interest on savings will all be tax-free. But if you go over the set allowances, not only will you have to pay tax on some of that cash, you’ll also need to tell HMRC.

Here’s what you need to know – and the deadline you can’t afford to miss.

Some articles on the site contain affiliate links, which provide a small commission to help fund our work. However, they won’t affect the price you pay or our editorial independence. Read more here.

What is self assessment?

Most of the income we earn is likely to be our wages, or if retired the State Pension and private pensions. They’re usually taxed at source which means the tax is taken before it even enters our bank account.

But most other earnings don’t get automatically reported to His Majesties Revenue & Customs (HMRC), or if they do, don’t automatically deduct the tax. In fact, in many cases it’s on us to inform them of what we’ve earned.

They way to do this, if you need to do it, is via a process called self assessment.

Who needs to complete one

HMRC says you need to complete a tax return if you meet one of the following criteria:

• You count as self-employed
• you get extra income from things like property, investments, some pensions and some savings
• you are a partner in a business partnership

We’ll ignore the last one as we’re a personal finance website, but the other two could impact any of us. Within those are a number of different incomes and I’ve taken a look at the ones you’re most likely to encounter.

I’ve noted when you need to register for a self-assessment in the first place and when you don’t. However it’s worth bearing in mind that if you already fill one in, you’ll then need to add relevant extra income even if you fall below tax-free limits.

You’ve got a side hustle

You might not think you’re self-employed, but there’s more that fits in here than many would expect. For a start, any ‘side hustle’ you’re running alongside your day-to-day job will count.

This can include selling items on sites like eBay and Vinted, or at physical events at boot sales. It also applies to having a room on AirBnb, driving on Uber and much more. Basically, anything where you’re making extra money.

However, the good news for casual and occasional money making is there’s a £1,000 tax-free allowance on any kind of extra income you make. So even if you are buying things to sell on, you’d need to be doing this regularly to make more than a grand each year. It’s worth noting that it’s across all side hustles, not per each one.

So if that’s the case you don’t need to worry. But if you go over £1,000 then you’ll need to register with HMRC.

And you won’t be able to dodge it either. If you are a frequent online seller there’s a good chance the platform will already tell HMRC, and from January 2025 they’ll have to do this by law. For online selling platforms it’ll be when you sell more than 30 items or make more than €2,000 (around £1,667).

Fortunately you’ll only pay tax on profit, so if you’re just getting rid of personal things you no longer need you’re probably making a loss.

You’ve earned interest on savings

As we’ve covered already on the site, most people won’t have to pay any tax on the interest they earn from savings. For a start there’s the £1,000 Personal Savings Allowance (PSA) for basic rate tax payers, which reduces to £500 for higher rate payers.

However, if you go over the PSA, you will need to pay tax on the interest above this. But you only need to tell HMRC via self-assessment if you already fill one in or if you make more than £10,000. That’s a huge amount, so it’s not something most need to worry about.

Earn below this level and your interest will be reported by the banks and building societies to HMRC who will take any tax due via your tax code. If you don’t want that to happen, then declaring via self-assessment is your best option.

Also, don’t forget it doesn’t apply to things like ISAs, Premium Bonds and the starting rate for savings.

You’ve got shares and investments

There are two core times when tax could be due on your stocks and shares. The first is from any dividend payments, and the second is from any profit you make when selling them, known as capital gains.

Once again there are some tax-free allowances which if you are under these thresholds mean you don’t need to tell HMRC. They’ve reduced a lot in recent years, with the dividend allowance currently sitting at £500 and capital gains allowance now £3,000 a year.

But even with these, you don’t need to tell HMRC unless you go over £10,000 in a year for each form of income, though for investing gains that threshold is shared with savings interest.

Of course, if those investments are held in an ISA the it’s all tax-free and you don’t need to worry.

You claim child benefit

This one only applies to high earners who have gone over the £60,000 earnings threshold for child benefit.

Even though you’ll have to pay some of it back via Income Tax if you earn between £60,000 and £80,000, and all of it above the latter, it can still be worth claiming the benefit.

That’s so you keep collecting National Insurance credits, which are really important for things like the State Pension.

To do this, you need to declare it on self-assessment forms and your tax code will be adjusted.

You’re eligible for extra pension tax relief

Most of the time the first 20% tax relief on workplace and private pensions is sorted when you pay. But Higher and Additional rate tax payers can get an an extra 20% and 25% respectively back on pension contributions, and to do this you need to register for self-assessment.

If you do miss the October registration deadline for this (more on this below) you don’t need to worry as you can backdate this by four years.

You earn foreign income

Ok, so this one will be more niche than the others for most of you, but any income from abroad, which includes interest and dividends in a different currency, needs to be declared via self-assessment.

The only exception is if your only foreign income is via dividends and the total dividends from the UK and overseas don’t go over the £500 annual tax-free allowance.

You rent out property or spare rooms

If you’re a landlord letting out a full property then you absolutely need to register for self-assessment if you earn more than £2,500 after ‘allowable’ expenses, or £10,000 a year before expenses.

But it’s a little different if you just rent out a spare room. That’s because there’s an extra tax-free allowance of £7,500 a year for furnished accommodation in your own home. This can also apply to using AirBnb type rentals – as long it’s your main residence.

But go above this threshold and you must register with HMRC. In fact you might prefer to do this even if you earn less as you’ll be able to claim back some expenses.

You earn more than £150,000

The last one is for big earners as you’ll need to let HMRC know via self-assessment if your total taxable income goes over £150,000.

When to register

There’s a really important deadline for telling HMRC that you’ve extra earnings to declare, and it’s 5 October of the financial year you earned the money.

So, say you made £4,000 from Vinted between 6 April 2023 and 5 April 2024, you need to tell HMRC by 5 October 2024 that you were ‘self-employed’ for that period.

You’ve then got until 31 January the following year to complete and submit your self assessment return.

Once you’ve registered you don’t need to do it again in future years, but you’ll still need to fill in the form each year, even if you no longer have any relevant income to declare. If that’s the case you can request to stop self-assessment.

How to register

You’ll need to head to the HMRC website where there’s a tool to help you check whether you need to register or not.

You’ll need your:

• full name
• postal address
• date of birth
• telephone number
• National Insurance number, if you have one

Once you’ve done this you’ll be sent an code in the post which can take 7 working days, and you then use this to activate your account.

You then need to wait another couple of weeks (14 working days) for a Unique Taxpayer Reference (UTR) number to come, also in the post.