Do I need to do Self Assessment if I am employed

Understanding what “Self Assessment” means in the UK

In the UK, “Self Assessment” usually refers to HM Revenue & Customs’ (HMRC) system for collecting Income Tax from people and businesses whose tax can’t be fully settled automatically through PAYE (Pay As You Earn). PAYE is the method most employees are familiar with: your employer deducts Income Tax and National Insurance from your wages, and pays it to HMRC on your behalf. Because PAYE is designed to capture the right tax at source, many employed people assume they never need to think about Self Assessment at all.

In reality, being employed doesn’t automatically mean you’re exempt from Self Assessment. Most employees do not need to file a Self Assessment tax return, but some do—either because they have additional untaxed income, have more complex tax affairs, or meet specific HMRC criteria that make a return necessary. The key point is this: the question is not “Am I employed?” but “Does my situation mean HMRC needs a tax return from me?”

This article explains how Self Assessment works alongside employment, the most common reasons an employee might still need to file, situations where you typically don’t, and what to do if you’re unsure. While it’s written in plain English, it’s still important to double-check your specific circumstances, because small details—like the level of additional income or the type of benefit you received—can change the answer.

PAYE vs Self Assessment: why most employees don’t need to file

PAYE is essentially an “automatic” tax collection system. Your tax code tells your employer how much tax-free allowance you have and whether you have any adjustments (for example, collecting tax for benefits in kind or correcting underpayment from a previous year). Your employer reports your pay and deductions to HMRC, and HMRC uses that information to track what you have earned and what tax has been deducted.

If all of your income comes from employment and is taxed correctly under PAYE, and you don’t have other factors that require a return, you will normally not need Self Assessment. Many employees go their entire working lives without ever filing a tax return. That said, HMRC can still ask any individual to file a return, and if they do, you must comply—even if you think your tax is already correct. HMRC requests can happen for a variety of reasons: data matching, unusual changes in income, or information HMRC has received that suggests you might have additional taxable income.

So the default position is simple: being employed typically means PAYE takes care of things. Self Assessment only becomes relevant if your tax affairs can’t be fully handled through PAYE, or if HMRC specifically requires a return from you.

When employed people usually DO need to do Self Assessment

There are several common scenarios where an employee might need to register for Self Assessment and file a tax return. Some are straightforward (you have a side income), and others are less obvious (taxable benefits, investment income, or high income leading to complications like the tapering of allowances). Below are the most frequent triggers.

You have self-employed income on the side

One of the most common reasons employed people file Self Assessment is that they also do freelance work, contract work, or run a small business alongside their job. This could be anything from consulting and coaching to selling goods online, driving for a rideshare app, or offering services like design, photography, tutoring, or trades work on weekends.

If you are genuinely self-employed for that side work, you may need to file a return to declare your profit (income minus allowable expenses). Even if your employment is taxed under PAYE, the self-employed element typically isn’t, and Self Assessment is the standard way HMRC collects tax on it.

It’s important to understand that HMRC cares about profit, not revenue. If you made £5,000 in sales but had £2,000 of legitimate business expenses, your taxable profit is £3,000. However, you still may need to file depending on the thresholds and HMRC rules for the relevant tax year. If you’re doing any side work at all, it’s wise to keep records from day one so you can calculate your profit accurately and support it if HMRC ever asks questions.

You have significant untaxed income (for example, from property)

Property income is another major reason employees end up needing Self Assessment. If you rent out a property (or part of your home in some cases), you might have to declare rental profit. While some tax on property income can sometimes be collected by adjusting a PAYE tax code, Self Assessment is often required when the amounts are larger or the situation is more complex.

This includes traditional buy-to-let arrangements, renting out a room beyond allowances, holiday lets (with their own rules), and overseas rental income. Property income can also involve allowable expenses such as letting agent fees, repairs, insurance, and mortgage interest relief rules. Because there are calculations involved, HMRC often expects these to be reported via a tax return.

You have investment income, dividends, or savings interest above certain levels

Many employees have some investment income: bank interest, dividends from shares, distributions from funds, or income from bonds. For small amounts, HMRC may be able to handle the tax automatically, especially if banks and investment providers report information to HMRC and your tax code can be adjusted.

However, if you have larger amounts of taxable savings interest, dividends outside tax-free allowances, or complex investment arrangements, you may be required to do Self Assessment. This can include situations where you have income from foreign investments, income that isn’t automatically reported in the way HMRC expects, or where you need to claim reliefs (for example, if tax has been withheld abroad and you want to claim credit under a double tax agreement).

Employees sometimes assume that investing is “separate” from employment tax, but from HMRC’s perspective, it all forms part of your total income picture for the year. Once your non-PAYE income becomes meaningful, a return becomes a practical way to reconcile everything.

You (or your partner) receive Child Benefit and you have a higher income

The High Income Child Benefit Charge (HICBC) can require Self Assessment for employed individuals. If you or your partner receive Child Benefit and one of you has income above the relevant threshold for the tax year, you may need to file a return to calculate and pay the charge.

This catches many employees by surprise, especially those who have always been PAYE-only. The complication is that the charge depends on “adjusted net income,” which can include more than just salary and can be affected by pension contributions and Gift Aid donations. HMRC may not have enough information to calculate this accurately through PAYE alone, which is why a return may be required.

Even if you choose to opt out of receiving Child Benefit payments, you might still want to make a claim (for example, to protect National Insurance credits in certain circumstances). Because the rules are nuanced and the financial impact can be significant, this is one area where employees often benefit from checking carefully whether a return is needed.

You earn a higher income and have complications such as tapered allowances

Higher earners can run into issues that make Self Assessment more likely. For example, Personal Allowance can be reduced once income exceeds certain levels, and additional tax rates may apply. While HMRC can often handle parts of this through tax codes, complex situations—especially when combined with other income types—may push you into Self Assessment territory.

Additionally, pension tax issues can arise. For instance, if you have very high income, you may face restrictions related to pension allowances, and in some circumstances you ma