UK Self Assessment From Scratch — Part 3: Declaring Every Type of Income

Quick answer

UK Self Assessment is a comprehensive declaration of your total income — even though some of it (PAYE salary) has already been taxed. HMRC uses the return to:

1. Apply the Personal Allowance once across all your income.
2. Calculate dividend and savings allowances against your specific income mix.
3. Apply your correct marginal tax rate (basic/higher/additional) to each income type.
4. Reconcile what you've already paid (PAYE deductions, CGT on property) against what you owe overall.

Every income source falls into one of these categories. Pick the ones relevant to you.

This is Part 3 of 8 in our Self-Assessment From Scratch series.

1. PAYE employment income

Form section: "Employment" or SA102.

You'll need your P60 from each employer for the tax year (issued by 31 May). It shows:

• Total gross pay (Box 1).
• Total tax deducted (Box 2).
• Total NI deducted (Box 4).
• Employer's PAYE reference (top of P60).

You also need any P11D showing benefits in kind (company car, medical insurance, accommodation, etc.).

Common errors:

• Missing a P60 if you had multiple employers in the year — list each one.
• Forgetting to add P11D BIK figures (they're not on the P60).
• Not declaring redundancy payments above £30,000 (the tax-free band).

2. Self-employed income

Form section: "Self-employment (full)" or SA103F. Use SA103S (short) if turnover under £85,000.

For each business:

• Turnover (gross, all receipts).
• Allowable expenses by category (covered in Part 4 of this series).
• Capital allowances (claims for asset purchases).
• Net profit — what you'll pay tax and Class 4 NI on.

Trading allowance alternative: if turnover under £1,000, no need to declare at all (and no return needed if this is your only "extra" income). If turnover £1,000-£2,000, you can either:

• Itemise expenses (better if expenses > £1,000), or
• Use the £1,000 trading allowance (treats £1,000 as deemed expenses).

You can only use the trading allowance if you're NOT also claiming actual expenses against the same business.

3. Rental income (UK property)

Form section: "UK property" or SA105.

For each rental:

• Gross rent received in the tax year.
• Allowable expenses:
  • Letting agent fees.
  • Property insurance.
  • Maintenance and repairs (NOT improvements).
  • Council tax/utilities (if paid by you, not the tenant).
  • Accountant fees.
  • Replacement of domestic items (white goods, sofa, etc.).
• Mortgage interest: NOT deducted as expense (Section 24 change since 2017). Instead, you get a 20% basic-rate tax credit against the mortgage interest paid.

Rent-a-room scheme: if you let a room in your main home, the first £7,500 of gross income is tax-free. Above that, you can either pay tax on the excess only or opt out and claim normal expenses.

Worked example — Mark, £15,000 gross rent, £6,000 mortgage interest

• Gross rent: £15,000
• Allowable expenses (excluding mortgage interest): £2,500
• Taxable profit: £12,500
• Income tax at higher rate (40%): £5,000
• Less: 20% tax credit on £6,000 mortgage interest = £1,200
• Final tax on rental: £3,800

Pre-2017, when mortgage interest was fully deductible, the calculation would have been:

• Profit £6,500 (after deducting £6,000 mortgage interest)
• Higher-rate tax £2,600

The Section 24 change cost Mark £1,200/year on this property.

4. Dividends

Form section: "Dividends" within the main return.

Declare:

• All UK dividends received in the tax year (whether from ISAs or not — no, ISA dividends NOT declared, only non-ISA).
• Foreign dividends (separate box, with withholding tax details).

2025/26 dividend allowance: £500.

Tax rates above the allowance:

Common errors:

• Including ISA dividends (don't — they're tax-free).
• Not converting foreign dividends to £ at HMRC published rates.
• Including the dividend tax credit abolished in 2016 — it no longer exists.

5. Savings interest

Form section: "Interest" within the main return.

Declare all interest received from:

• UK bank/building society savings accounts.
• Government bonds (excluding ISAs and Premium Bonds — Premium Bonds prizes are tax-free).
• Peer-to-peer lending.
• Corporate bonds outside an ISA.

2025/26 Personal Savings Allowance:

Interest above PSA is taxed at your marginal rate.

Banks now report directly to HMRC since 2025 — your figures must match the bank's reported figures, or HMRC raises queries.

6. Foreign income

Form section: "Foreign" or SA106.

For each foreign income source:

• Type (salary, dividend, rental, interest, royalty, pension).
• Source country.
• Gross amount in foreign currency.
• GBP equivalent at HMRC published exchange rate (use the HMRC monthly exchange rates).
• Foreign tax paid — typically eligible for double-tax relief.

Common situations:

• US dividends — 15% withholding tax via W-8BEN. UK tax (basic 8.75%) applied to gross dividend, less the 15% US tax. Net UK liability often near zero for basic-rate, ~18% extra for higher-rate.
• Property rental abroad — declared in £, often eligible for double-tax relief if you've paid local tax.
• Foreign employment income — depends on residence, domicile and treaty.

Non-domiciled status changed materially from April 2025 — foreign income and gains now taxed on a residence basis for new arrivals.

7. Crypto disposals

Form section: "Capital Gains" or SA108. Crypto is treated as a chargeable asset, not currency.

Every disposal is a CGT event:

• Sell to GBP — disposal.
• Swap one crypto for another — disposal (e.g. BTC → ETH).
• Pay for goods/services with crypto — disposal.
• Gift crypto to anyone except spouse/civil partner — disposal.

For each disposal:

• Date.
• Proceeds in £ (at time of disposal).
• Cost in £ (at time of acquisition, including transaction fees).
• Gain or loss.

Pooling rules apply: you can't pick which specific BTC you "sold" — they're treated as a pool with an averaged cost basis.

Annual CGT exemption £3,000 (2025/26). Above that, taxed at 18% (basic-rate slice) or 24% (higher-rate slice) since October 2024.

Crypto exchanges report to HMRC since January 2025 under the UK's adoption of the OECD Crypto-Asset Reporting Framework. Don't underdeclare.

8. Capital gains (other)

Form section: SA108.

Other CGT-triggering disposals:

• Shares outside ISA.
• Second properties (28% rate for residential, reported within 60 days separately).
• Antiques, art, jewellery above £6,000 per item.
• Business assets (potentially Business Asset Disposal Relief applies).

Reporting threshold: you must report CGT if either:

• Total proceeds exceed £50,000 (regardless of gain size), or
• Total gains exceed £3,000.

UK residential property disposals also require separate 60-day CGT reporting at gov.uk, on top of the annual Self Assessment entry.

9. Trust and estate income

Form section: SA107.

If you're a beneficiary of a UK trust, the trustee provides you with form R185 showing income received and tax already deducted. Include this on your return; tax already paid by the trust generates a credit.

10. State Pension and other pension income

Form section: "Pension" within main return.

Declare:

• State Pension (annual amount received).
• Workplace and personal pensions received (taxable amounts only; tax-free lump sum portions are separate).
• Foreign pensions.

State Pension is not taxed at source — HMRC reduces your tax code at any other PAYE income to claw back the tax. If your only income is State Pension and it falls under your Personal Allowance, you may not need Self Assessment at all.

ISAs — NOT declared

Once more for clarity: ISA interest, dividends and capital gains are not part of your Self Assessment. You don't even declare the existence of an ISA on the return. They're invisible from a tax perspective.

The only thing to be careful about: contributions exceeding £20,000 per year. HMRC will eventually contact you to remove the excess — but this is handled via ISA provider correspondence, not via Self Assessment.

Tools and evidence to keep

For the tax year just ended (and prior 5 years — HMRC's enquiry window):

• P60s, P45s, P11Ds from all employers.
• Self-employed records: invoices, receipts, mileage log, bank statements.
• Rental records: rent received, repair receipts, agent statements.
• Bank statements showing all interest credits.
• Dividend voucher / consolidated tax certificate from each platform.
• Crypto transaction history export.
• Foreign tax return / payment evidence.

Required to keep for 5 years after the 31 January submission deadline.

Where the form actually is

Logged into your Government Gateway:

1. Self Assessment dashboard → "Complete your tax return".
2. Pre-filled boxes from employer / pension data where HMRC has it.
3. Add supplementary sections as needed (SA102 for employment, SA103 for self-employed, SA105 for property, SA106 for foreign, SA108 for capital gains, SA107 for trusts).
4. Save partial work and return.
5. Submit when complete by 31 January.

Coming next in the series

• Part 4: Allowable expenses if you're self-employed
• Part 5: Capital gains in detail
• Part 6: Payments on account
• Part 7: Making Tax Digital
• Part 8: After you file

Sources

• HMRC: Self Assessment tax returns
• HMRC: Tax on savings interest
• HMRC: Tax on dividends
• HMRC: Renting out a property
• HMRC: Cryptoassets manual
• HMRC: Foreign income
• HMRC: Capital Gains Tax