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If you're self-employed, lenders may require an SA302 and tax year overview as proof of earnings for mortgages or loans. These documents verify income declared on your self-assessment tax return and are easily accessible via HMRC. Learn how to obtain them.
The use of these forms has become more widespread since mortgage regulations began requiring self-employed individuals to provide verifiable evidence of income. The SA302 serves as proof of income for the last four years of self-assessment tax returns.
The SA302 document provides a detailed breakdown of the income reported on the taxpayer’s self-assessment tax return, including commercial versions of the tax return. Meanwhile, the tax year overview confirms the tax due based on the return submitted to HMRC, showing any payments made, and cross-referencing the Tax Calculation with HMRC’s records.
Self-assessment taxpayers can request an SA302 tax calculation through HMRC’s online service. After submitting an online tax return, it typically takes around 72 hours for the documents to become available for printing.
Most lenders will accept an SA302 printed directly from online accounts or from the commercial software used to submit tax returns. HMRC has been actively working with the Council of Mortgage Lenders and its members to expand the number of lenders willing to accept self-serve copies of these documents as valid proof of income.
Maintenance Payments Relief reduces Income Tax for those making court-ordered payments to an ex-spouse or civil partner. To qualify, one party must have been born before 6 April 1935. The relief is 10% of payments, up to £428 per year.
To qualify for this relief, all of the following conditions must apply:
To claim, you must contact HMRC. The process involves providing necessary documentation, such as proof of the court order and payment records.
This benefit is designed to reduce the overall tax burden, helping someone manage their financial responsibilities after a separation.
However, it's important to note that this tax relief is limited due to the age condition — it only applies if either party was born before 6 April 1935, which significantly restricts its usage.
The UK's shift to the Foreign Income and Gains (FIG) regime from April 2025 changes how foreign income is taxed. If you are a UK resident, get ready to possibly pay UK Income Tax on all foreign earnings—no more non-dom remittance basis.
UK Income Tax is generally payable on taxable income received by individuals including earnings from employment, earnings from self-employment, pensions income, interest on most savings, dividend income, rental income and trust income. The tax rules for foreign income can be very complex.
However, as a general rule if you are resident in the UK you need to pay UK Income Tax on your foreign income, such as:
Foreign income is defined as any income from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign.
If you are not UK resident, you do not generally have to pay UK tax on your foreign income. There are special rules if you work both in the UK and abroad.
The remittance basis rules which allowed non-UK domiciled individuals (often referred to as non-doms) to be taxed only on UK income and gains, is being abolished. From 6 April 2025, the concept of domicile as a relevant connecting factor in the UK tax system has been replaced by a new residence-based regime known as the Foreign Income and Gains (FIG) regime.
HMRC has launched a new "Help for Hustlers" campaign to help people who are earning extra income, figure out if they need to pay tax on the additional earnings. The campaign runs until the end of March and focuses on five key areas where tax might apply:
The good news is there are two £1,000 tax allowances — one for property income and one for trading income. If you have both types of income, you can claim £1,000 for each.
These allowances cover all relevant income before expenses. If your income is under £1,000, it’s tax-free. If you earn more than £1,000, you can choose to either deduct the £1,000 allowance from your income or list your actual expenses when calculating your taxable profit.
However, if your side hustle income goes over £1,000 in a tax year, you may need to complete a self-assessment tax return. Keep in mind this only applies if you are actively trading or selling services. If you are just clearing out some old stuff and selling it, there is usually no need to worry about tax.
Tax on rental income from jointly owned property depends on ownership shares, unless part of a partnership. Married couples default to a 50/50 split unless they notify HMRC of a different income allocation based on actual ownership proportions.
When property is jointly owned with one or more individuals, the taxation of rental income depends on whether the rental activity is considered a partnership. Simply owning property together does not automatically qualify the arrangement as a partnership.
If the jointly owned property is not part of a partnership, the allocation of any profit or loss from the jointly owned property is typically based on each person's ownership share in the property. However, the co-owners can agree to divide the profits and losses differently than their ownership proportions, so it’s possible for one person to receive a larger or smaller share of the profits or losses than their share in the property itself. For tax purposes, the profit and loss share must reflect the actual agreement made by the owners.
In cases where the joint owners are married or in a civil partnership, the profits and losses are generally treated as being divided equally between them, unless:
If these conditions are met, the profit and loss distribution will follow the agreed-upon ownership percentages, rather than the default equal split for married couples or civil partners.
Over 11.5 million people met the 31 January 2025 self-assessment deadline, but 1.1 million taxpayers missed it. If you're one of them, expect a £100 penalty. Learn about late fees and HMRC’s payment plan options to avoid further charges.
There are an estimated 1.1 million taxpayers that missed the deadline. Are you among those that missed the 31 January 2025 filing deadline for your 2023-24 self-assessment returns?
If you have missed the filing deadline then you will usually be charged a £100 fixed penalty if your return is up to 3 months late, regardless of whether you owed tax or not. If you do not file and pay before 1 May 2025 then you will face further penalties unless you have arranged to pay with HMRC.
If you are unable to pay your tax bill, there is an option to set up an online time to pay payment plan to spread the cost of tax due on 31 January 2025 for up to 12 months. This option is available for debts up to £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.
If you owe self-assessment tax payments of over £30,000 or need longer than 12 months to pay in full, you can still apply to set up a time to pay arrangement with HMRC, but this cannot be done using the online service.
Big changes are here for the self-employed! From 2024-25, profits must align with the tax year, replacing the old "current year basis." Overlap relief is ending, and transition profits will be spread over five years. Here’s how the new system affects your tax bill.
The reform to the self-employed tax basis period has introduced significant changes in how trading income is allocated to tax years. Previously, the tax basis period operated on a "current year basis," but the reform has now shifted to a "tax year basis." As a result, all sole traders and partnership businesses are required to report their profits based on the tax year, commencing with the self-assessment return that was due by 31 January 2025. This return covered the tax year 2023-24.
Under the previous system, overlapping basis periods could occur, which resulted in certain profits being taxed twice. To counter this, businesses could claim ‘overlap relief,’ typically at the time of business cessation. The introduction of the "tax year basis" eliminates the possibility of overlapping basis periods, thereby preventing the generation of further overlap relief.
It is important to note that businesses which already prepare annual accounts to a date between 31 March and 5 April are not affected by these changes. These businesses continue to file their tax returns as they did under the old system, without any alteration.
The full implementation of the new rules takes effect in the current 2024-25 tax year, which ends on 5 April 2025. The 2023-24 tax year is considered a "transition year." During this transitional period, the basis periods for all businesses will be aligned with the tax year, and any outstanding overlap relief can be utilised against profits for that period.
In cases where profits exceed the period covered by the overlap relief—specifically profits that span more than 12 months—these are referred to as "transition profit." This transition profit will, by default, be spread across five tax years, from 2023-24 to 2027-28, to help ensure a smooth adjustment to the new rules.
Your tax code determines how much tax is deducted from your pay. While 1257L is the most common, different letters and numbers can affect how much you owe. From marriage allowance to emergency codes, here’s how to decode what HMRC assigns you.
Your tax code is basically a set of letters and numbers that show whether you are entitled to the annual tax-free personal allowance (the amount you can earn without paying tax). These codes are updated each year and help your employer figure out how much tax to take off your pay.
For the current and next tax years, the standard personal allowance is £12,570, and if you are entitled to this, your tax code will likely be 1257L. This is the most common code and applies to people with one job, no untaxed income, and no taxable benefits like a company car.
But tax codes are not always that straightforward. There are all sorts of other letters and numbers that might pop up. For example, if you are claiming the marriage allowance, your code might have an "M" in it. If you are paying tax at the Scottish rates, your code will start with an "S." And if your personal allowance gets reduced for some reason, like unpaid tax or income adjustments, your code will change accordingly.
Then there are the emergency tax codes—W1 or M1—which are used when someone starts a new job and does not have a P45 yet. These codes mean your tax will be calculated based on just that specific pay period, rather than your full income.
If you spot a 'K' at the start of your tax code, it means deductions (for things like company benefits, state pension, or previous tax owed) are greater than your personal allowance. Your tax deduction won’t be more than half of your pay or pension.
Gift Aid transforms charitable donations by allowing charities and CASCs to claim 25p extra for every £1 given—at no additional cost to you. Higher and additional rate taxpayers can also claim valuable tax relief, making giving even more rewarding.
Higher and additional rate taxpayers can claim tax relief on the difference between the basic rate of tax and their highest rate. This can be done through their self-assessment tax return or by requesting HMRC to adjust their tax code.
Example:
If a taxpayer donates £1,000 to charity, the total value of the donation to the charity is £1,250. The taxpayer can claim additional tax relief based on their tax rate:
It is important to ensure that the taxpayer has paid enough tax in the relevant year. Donations will qualify for tax relief as long as the total claimed does not exceed four times the amount of tax paid in that year. If more tax relief is claimed than entitled, the taxpayer must notify the charity and repay the excess to HMRC.
Additionally, taxpayers can make donations directly from their wages through a payroll giving scheme if their employer operates one approved by HMRC. This allows donations to be made tax-free from salary or pension payments.
HMRC reports over 63,000 taxpayers filed their returns over the New Year, but 5.4 million still need to act before the looming 31 January 2025 deadline. File now to avoid penalties, pay your 2023-24 tax, and set up payment plans if needed to stay compliant.
The deadline for submitting your 2023-24 self-assessment tax return online is fast approaching—31 January 2025. This date is not just for filing your return; you also need to pay any tax due by this time. This includes settling any remaining tax from the 2023-24 tax year, plus the first payment on account for the 2024-25 tax year. It’s crucial to remember this deadline to avoid penalties.
If you miss the deadline, be aware of the penalties that can arise. The first penalty is an automatic £100 charge, which you will incur even if you do not owe any tax or if you have paid on time. If your return is still late after 3 months, you will face daily penalties of £10 per day, which can add up to a maximum of £900. After 6 months, another penalty kicks in, which is either 5% of the tax you owe or £300, whichever is greater. Then, if you are still late after 12 months, you will face another penalty of 5% of the tax due or £300, whichever is greater.
On top of these filing penalties, there are also penalties for late payment. If you do not pay your tax bill on time, HMRC charges 5% of the unpaid tax at 30 days, 6 months, and again at 12 months. Interest will also be charged on any outstanding amount.
If you are struggling to pay your tax, there is an option to set up a payment plan online, where you can spread the cost of what’s due by 31 January 2025 over up to 12 months. This option is available for debts up to £30,000, but you will need to set up the plan no later than 60 days after the due date. It is a good idea to set it up sooner rather than later because if your tax is still outstanding on 1 April 2025 and you have not made arrangements, you will face an additional 5% late payment penalty.
If you owe more than £30,000 or need longer than 12 months to pay, you can still apply for a time to pay arrangement, but you will not be able to do this through the online service. Make sure to file your return and pay on time to avoid these costly penalties.
