Do Employees Need to Do a Tax Return? The 2025/26 Checklist (Due 31 January 2027)

Side income: the £1,000 trading allowance

Selling things you make, freelance work, tutoring or delivery driving alongside a job is trading income. If your gross trading income in the tax year was £1,000 or less, you do not need to tell HMRC, with some exceptions. If it was more than £1,000, you must register for Self Assessment by 5 October after the tax year⁴.

On the return you can deduct the £1,000 trading allowance instead of your actual expenses, but not both⁴. Pick whichever leaves less profit.

The salary already uses the Personal Allowance, so the profit is taxed at the 20% basic rate. Because £1,400 is over £1,000, this person must send a 2025/26 return even though the tax is only £80. Figures are Income Tax only, England, Wales or Northern Ireland.

Rent, savings and dividends

• Rent: the first £1,000 of property income is tax-free. Between £1,000 and £2,500 a year, contact HMRC. You must use Self Assessment if it is more than £2,500 after allowable expenses or more than £10,000 before them⁵.
• Savings interest: if you owe tax on it, HMRC usually works it out and sends you a tax calculation, so you do not need a return for that alone⁶.
• Dividends within the £500 dividend allowance: nothing to tell HMRC. Tax to pay on dividends up to £10,000: tell HMRC between 6 April and 5 October after the tax year (for example by asking them to change your tax code), or put them on a return if you already send one. Over £10,000: you must send a Self Assessment return⁷.

Example: £3,000 of dividends on top of a £40,000 salary in 2025/26. The first £500 is covered by the allowance and the other £2,500 is taxed at 8.75%, which is £218.75. That is under £10,000 of dividends, so no return is needed just for this, but HMRC still has to be told.

Capital Gains Tax and the Child Benefit charge

If you sold shares, crypto, a second home or other assets at a gain and have Capital Gains Tax to pay, you must send a return¹. UK residential property sold from 27 October 2021 is different: you report and pay within 60 days of completion. Some people can use HMRC's real time Capital Gains Tax service instead⁸.

The High Income Child Benefit Charge applies where you or your partner had adjusted net income over £60,000 and Child Benefit was paid. Employees who do not need a return for any other reason can pay it through their tax code instead, for 2025/26 up to 31 January 2027⁹. Work out the amount with our estimator on the Child Benefit charge guide.

Deadlines and penalties for 2025/26

A return filed late costs £100 straight away, even if there is no tax to pay. After 3 months HMRC adds £10 a day for up to 90 days (£900), then after 6 months and again after 12 months a further 5% of the tax due or £300, whichever is more. Paying late costs 5% of the unpaid tax at 30 days, 6 months and 12 months, plus interest¹⁰².

Not sure, or no longer need to?

GOV.UK has a short tool to check whether you need to send a return¹¹. If you were in Self Assessment but your circumstances have changed, for example your side business stopped, you need to tell HMRC; see our guide to leaving Self Assessment. You can also choose to send a return voluntarily, for example to pay voluntary National Insurance or prove self-employment¹.