Self Assessment (UK)
Definition
The UK system where individuals report their income and calculate their own tax liability by filing a tax return with HMRC. Most employees don't need to file because PAYE covers their taxes, but self-assessment is required for self-employed individuals, those with income over £150,000, company directors, and those with significant investment income, rental income, or foreign income. The deadline for online filing is January 31 following the end of the tax year (April 5).
Example
A UK freelancer earning £50,000 must register for self-assessment, keep records of income and expenses, and file a return by January 31. They'd owe approximately £7,486 in income tax and £3,568 in National Insurance.
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