Self assessment is a description of the system for gathering tax from people who normally need to pay some tax directly to HM Revenue and Customs each year.

The key elements are that you are required to complete a tax return, and that you receive regular statements of account from HM Revenue and Customs showing tax falling due and payments that you have made.

The process usually starts when you are sent a tax return. Most returns are issued in April. A tax return is a form on which you are asked to report your income and capital gains, and give details of reliefs and allowances claimed, for a particular tax year. The tax year runs from 6 April to 5 April, and the tax return covering the year ended 5 April 2008 is sometimes called the '2008 tax return', or the return for 2007/08.

If you are sent a tax return, you must complete it, whatever the level of your income.
This applies even if a previous self-employment has ceased, and all your income is now from employment, or benefits, or you have no income. If you submit your tax return on paper and would like HM Revenue and Customs to calculate your tax bill, you must send in your tax return by 31 October. Alternatively, you may submit your tax return online until 31 January and the tax will be calculated for you automatically. There is information about how to submit your tax return online on the HM Revenue and Customs and Excise website self assessment online page and the self assessment pages.

If you are not sent a tax return, but you have received income without tax being deducted and this income is greater than your tax-free personal allowance for the year (see rates and allowances section), you should tell HM Revenue and Customs and ask for a return. It is generally a good idea to let HM Revenue and Customs know about income which is not taxed at source as soon as you begin to receive it. This should always be done in writing, and you should keep a copy of your letter.

You need to tell HM Revenue and Customs if you have untaxed income, higher rate liability or gains by 5 October following the end of the tax year, so that you can be issued with a tax return. For example, if you have a new source of untaxed income in the year to 5 April 2008, you must notify HM Revenue and Customs by 5 October 2008.

If you don't do this you may be charged a penalty. HM Revenue and Customs does not normally charge the full amount of the penalty, which can be as much as the tax due and unpaid for the tax year covered by the return. So if you pay any tax due on time - by 31 January following the end of the tax year - you will avoid the penalty.

If you think that you may need a return to declare capital gains - see the outline information at the section Other taxes on your return in the How the tax system works section.

If you file on-line you can choose the tax return pages you need when you submit your return. If you are new to self-assessment on-line remember to allow time for registration and receipt of your access codes by post from HM Revenue and Customs.

If you intend to file a paper return, you should check the 'package' you are sent, and make sure you have the forms you need. For instance, if you are self employed, but have taken on a part-time employment as well, you will need to ask for the employment page if this is not included. Page 2 of the tax return provides a useful checklist for the pages you need.

If you need extra pages, you can download them from the HMRC website or alternatively call the Self Assessment Orderline on 0845 9000 404. It is open 8am - 10pm, seven days a week and calls are charged at local rates. Or you can fax your order to the SA Orderline on 0845 9000 604. Details of all these methods can be found on the HMRC website contact us pages.