Do I need to file a self assessment tax return and report a COVID-19 grant?


Date: 5 January 2022

A close up of the HMRC website

More than 12 million people file a self assessment tax return each year, which is almost a fifth of the UK population. This number includes sole trader bricklayers, plumbers and plasterers, as well as hairdressers, cake makers and chefs, and self-employed tutors, translators and tattoo artists. There are people of all occupations, trades and backgrounds that 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 this number includes 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. This includes many UK sole traders that have received taxable COVID-19 grants and support payments from the government and other sources that must 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 HMRC (the UK tax authority) 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
  • you or your partner have received Child Benefit and either of you has an annual income of more than £50,000
  • you have received more than £2,500 in other untaxed income (eg tips or commission)
  • you are self-employed (ie a sole trader) with an annual turnover of more than £1,000
  • you are a partner in an ordinary business partnership
  • you are an employee claiming expenses worth more than £2,500 a year
  • you have earned taxable income from savings, investments or dividends
  • you 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 whether you need to file a self assessment tax return, HMRC provides an online tool that you can use to check whether you need to file a self assessment tax return.

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Need to know!

  • If you need to file a self assessment tax return, you have until the 31 January following the end of the relevant tax year (ends on 5 April) 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
  • whether you've registered previously for self Assessment

You'll also be asked for basic information about your new sole trader business, if that's the reason for your registration. Once you've answered the questions, HMRC will create an account for you. You'll then receive a letter with your Unique Taxpayer Reference (UTR) number within ten 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!

Reporting COVID-19 grants and support payments

To help some self employed people stay afloat during the COVID-19 pandemic, the government introduced a range of business-support measures, including SEISS (the Self-Employment Income Support Scheme), which began in May 2020. Up to 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
  • Coronavirus Business Support Grants

The GOV.UK website 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

Sponsored post. Copyright 2021. Featured article by Mike Parkes of GoSimpleTax - tax return software that can help you manage your self assessment.

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