Do I need to do a Self Assessment tax return if I am employed?
If you are employed, you may not need to complete a Self Assessment tax return. In many cases, your employer deducts Income Tax and National Insurance through PAYE, and that is enough.
But PAYE does not automatically cover every tax situation. You may still need to file a Self Assessment tax return if you have other income, need to report a capital gain, receive rental income, have significant dividends or savings interest, pay the High Income Child Benefit Charge, or HMRC asks you to send a return.
GOV.UK’s Self Assessment overview explains that tax is usually deducted automatically from wages and pensions, but people and businesses with other income must report it in a Self Assessment tax return.
Merranti’s Self Assessment tax return guide is a useful starting point if you are unsure whether PAYE has dealt with everything.
PAYE does not always mean your tax is complete
PAYE is designed to collect tax from employment income. It can also collect some other tax through your tax code, but it does not remove every reporting obligation.
GOV.UK’s guide on who must send a tax return says you may need to send a return if you have untaxed income such as rental income, tips, commission, savings, investments, dividends or foreign income.
This is where employees often get caught. They assume “I am on payroll” means “HMRC already knows everything”. That may be true for salary, but not necessarily for side income, property income, investment income or capital gains.
Merranti’s Self Assessment registration guide explains why the answer can change once you add side income, property, dividends or capital gains.
Side income and freelance work
If you have employment income and also earn money on the side, Self Assessment may be needed.
GOV.UK says you must send a tax return if you were self-employed as a sole trader and earned more than £1,000 before deducting expenses. GOV.UK explains this in who must send a tax return.
This can include:
- freelance work
- tutoring
- content creation
- online sales
- delivery work
- consulting
- design or writing work
- paid weekend work
- trade or repair work
Merranti’s trading allowance guide explains the £1,000 trading allowance and why it is based on gross income, not profit. Merranti’s £1,000 trading and property allowances guide is also useful if you have small amounts of side income or property income.
If the side activity is becoming regular, Merranti’s guide on registering a new business with HMRC explains when Self Assessment, PAYE, VAT and other registrations may become relevant.
Rental income
Employees with rental income often need to consider Self Assessment.
GOV.UK’s renting out property guidance explains that rental income may need to be reported, and that the first £1,000 of property rental income may be covered by the property allowance in some cases.
Rental income is not normally taxed through your employment payroll. If you rent out a property, a room, a former home or a second property, you should check whether HMRC needs to be told.
Merranti’s MTD ITSA and property landlords guide is useful if your rental income is growing, because landlords may also need to prepare for Making Tax Digital depending on their qualifying income. Merranti’s guide on what happens if your income falls or you sell a property before MTD starts is relevant if your property income is changing.
If you are selling a rental property, Self Assessment may not be the only issue. Merranti’s CGT on residential property sales guide explains the separate 60-day reporting deadline for UK residential property gains.
Dividends, savings and investment income
Employees may also need Self Assessment because of investment income.
GOV.UK’s who must send a tax return guidance says you may need to send a return if you have income from savings, investments or dividends.
This can affect company directors, shareholders, investors and employees with large savings balances. PAYE may collect the right tax in some cases, but you should not assume that without checking.
GOV.UK’s tax on dividends guidance explains how dividend tax works, and GOV.UK’s tax on savings interest guidance explains the savings allowance rules.
Merranti’s salary vs dividends director guide is relevant for employed directors who receive dividends from their own company. Merranti’s director remuneration guide also explains how employment income, dividends and company profits interact.
Capital Gains Tax
Employees may need a Self Assessment tax return if they have to pay Capital Gains Tax.
GOV.UK’s who must send a tax return guidance says you must send a return if you had to pay Capital Gains Tax when you sold or disposed of something that increased in value.
This can apply to:
- selling shares outside an ISA
- selling a second home
- selling a rental property
- disposing of cryptoassets
- selling business assets
- gifting assets in some situations
GOV.UK’s Capital Gains Tax overview explains the main rules. Merranti’s CGT allowances, rates and planning considerations guide is useful if you want the wider planning position.
If the gain relates to a UK residential property, Merranti’s CGT on residential property sales guide is especially important because property gains can have a reporting deadline before the normal Self Assessment deadline.
High Income Child Benefit Charge
Employees can also be caught by the High Income Child Benefit Charge.
GOV.UK’s High Income Child Benefit Charge overview explains that you or your partner may have to pay the charge if either of you receives Child Benefit and at least one of you earns over the threshold.
For tax years from 2024/25 onwards, GOV.UK says the threshold is over £60,000 of adjusted net income. GOV.UK’s High Income Child Benefit Charge overview explains how the threshold works and what counts as income.
You may be able to pay the charge through PAYE in some situations. GOV.UK’s pay the High Income Child Benefit Charge through PAYE guidance explains when that is possible. If you cannot pay through PAYE, or it is too late, GOV.UK’s pay the charge through Self Assessment guidance explains when Self Assessment is required.
Merranti’s Self Assessment key dates and penalties guide is useful if you need to register because of Child Benefit and want to avoid missing the 5 October or 31 January deadlines.
When HMRC asks you to file
If HMRC sends you a notice to file a tax return, you usually need to deal with it even if you think no tax is due.
GOV.UK’s Self Assessment overview says you must send a return if HMRC asks you to. Ignoring the notice can lead to penalties.
If you believe you no longer need to send a tax return, you need to tell HMRC. GOV.UK’s no longer need to send a tax return guidance explains how to ask HMRC to remove you from Self Assessment.
Merranti’s guide on what to do if HMRC opens an enquiry into your tax return is also useful if HMRC is already asking questions about income or previous returns.
Deadlines employees should know
If you need to complete a tax return and have not sent one before, GOV.UK says you must normally tell HMRC by 5 October after the end of the tax year. The online filing and payment deadline is usually 31 January. GOV.UK’s Self Assessment overview explains these deadlines.
Merranti’s Self Assessment key dates for 2026–2027 sets out the main tax return dates in one place. Merranti’s when are Self Assessments due guide is also useful if you want a simpler explanation of registration, filing and payment deadlines.
If tax is due, you may also need to understand payments on account. Merranti’s payments on account guide covers the January and July payment issue that can surprise first-time Self Assessment taxpayers.
Penalties and late filing
If you need to file and miss the deadline, penalties and interest can apply.
GOV.UK’s Self Assessment penalties guidance explains the penalties for late filing and late payment. GOV.UK’s sending a Self Assessment return guidance also explains that filing early can help you budget, know what you owe, and set up a payment plan if needed.
Merranti’s Self Assessment key dates and penalties guide explains the practical consequences of missing registration, filing and payment deadlines. Merranti’s how to pay your Self Assessment tax bill guide is useful once the return has been prepared and the amount due is known.
Speak to Merranti if you are unsure
Being employed does not automatically mean you are outside Self Assessment. PAYE may cover your salary, but it may not deal with side income, rental income, dividends, savings, capital gains, foreign income, Child Benefit charges or HMRC notices.
Merranti’s Self Assessment tax return guide, Self Assessment registration guide, trading allowance guide, landlord M TD guide, CGT guide and Self Assessment deadlines guide cover the main connected issues.
If you are employed but unsure whether you need to file a tax return, contact Merranti Accounting before the 5 October registration deadline or the 31 January filing deadline.
Do I need a Self Assessment tax return if I am employed?
Not always. If all your tax is dealt with through PAYE, you may not need one. But GOV.UK’s Self Assessment guidance on who must send a tax return explains that employees may still need to file where they have untaxed income, rental income, savings, dividends, foreign income, Capital Gains Tax or the High Income Child Benefit Charge.
Does PAYE mean I never need to file a tax return?
No. PAYE usually deducts tax from wages and pensions, but it does not automatically deal with every type of income. GOV.UK’s Self Assessment overview explains that people and businesses with other income must report it in a tax return.
When do I need to register for Self Assessment?
If you need to complete a tax return and have not sent one before, you normally need to tell HMRC by 5 October after the end of the tax year. Merranti’s Self Assessment registration guide explains the common grey areas.
Do I need Self Assessment for rental income?
You may do. GOV.UK’s renting out property guidance explains when rental income needs to be reported, and Merranti’s MTD ITSA property landlord guide explains the wider reporting issues for landlords.
Can I stop filing Self Assessment if I no longer need it?
Yes, but you need to tell HMRC. GOV.UK’s no longer need to send a tax return guidance explains how to ask HMRC to remove you from Self Assessment.
