7 surprising reasons you might need to file a tax return in January

If you think tax returns are just for the self-employed, think again. Anyone with untaxed income from 2023-24 may need to complete a self-assessment form and pay the bill by 31 January 2025.

In a Which? survey of 1,269 members in November 2024, just under a third said they would be submitting a self-assessment tax return. Of these, 15% planned to file tax returns because of money made from self-employment. Meanwhile 18% need to pay tax on state pension income that exceeds their personal allowance, and 57% need to pay tax on savings interest or investment income.

With HMRC data showing that more than five million people are yet to file, we reveal seven lesser-known income streams and contributions you might need to include in your self-assessment tax return. 

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1. Savings interest

Most people get a personal savings allowance (PSA), which shields a portion of interest earned on savings from income tax. The PSA currently stands at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. Additional-rate taxpayers don't have a PSA, meaning all their savings interest is subject to income tax.

But the savings balance required to exceed the PSA has shrunk considerably over the past couple of years, thanks to rising savings rates. 

Interest on savings is usually paid gross, which means tax isn't automatically deducted before interest is paid. If you're employed or receiving a pension, HMRC will normally change your tax code to obtain the tax owed from your income. This happens automatically for savings interest.

But if you're paying your tax using self-assessment, then it's your job to report your savings income as part of your tax return. You'll also need to use self-assessment if you earn more than £10,000 from savings and investments in a year, regardless of other income.

Money made from the selling of assets, investments and shares is also subject to tax and will need to be declared using self-assessment. Read our guide to find out more about how this type of income is taxed.

2. Pension contributions and income

Pension contributions

The government puts a limit on the amount of pension contributions you can earn tax relief on. This is called the pensions annual allowance, and it's set at 100% of your income or £60,000 – whichever is lower. This means that any pension contributions you make over the limit will be subject to income tax at the highest rate you pay. 

If you exceed the annual allowance in a year, you won't receive tax relief on any contributions you paid that exceed the limit, and you'll be faced with an annual allowance charge. This charge is added to the rest of your taxable income for the year to work out your overall tax liability.

You'll need to fill out a self-assessment tax return to detail how much of your pension contributions exceed the annual allowance and work out how much is due.

• Find out more: pension tax relief explained

State pension income

If you usually pay your taxes using self-assessment and your state pension income exceeds the current tax-free personal allowance of £12,570 then you will need to declare this when you fill out the form.

If you don't earn income from any other sources, you don't need to complete a tax return based on your state pension income alone. In this case, HMRC will write to you and tell you what you owe. 

3. Side hustles

Extra money made from selling goods or services counts as self-employed income. So whether you've sold clothes on Vinted, rented your home to tourists using Airbnb, or delivered takeaways in your spare time, you may need to declare that money via self-assessment.

There are a couple of allowances that apply to certain types of income:

• The trading allowance will cover you for up to £1,000 of money made from selling items. 
• The property allowance can cover up to £1,000 of income from monetising your property in some way – such as being an Airbnb host or renting out your driveway.

Tax may be charged on anything that exceeds these allowances.

• Find out more: tax-free income and allowances

4. Donations to charity

When you donate to charity, by default the money you give is net of tax. Opting in to the Gift Aid scheme permits the charity to reclaim the 20% basic-rate income tax from HMRC. 

But if you opted in to Gift Aid and haven't paid enough tax during the year to cover the 20% the charity will reclaim, then you will need to pay the levy yourself. 

5. Tips and commission

Whether it's tips made from waiting tables and bartending or cash given for casual work, miscellaneous income is taxable. The amount of tax owed, and how it’s paid, depends on who the tips are for and who decides how they’re shared out.

If a customer pays the tip directly to you – in cash, for example – then you will need to include anything over the £1,000 trading allowance on your self-assessment return. Alternatively, employees can call HMRC and ask them to deduct what's owed from your monthly wages through PAYE. 

Those earning money from service charges – such as those added to the bill in a restaurant, tips paid by card or cheque, and bonuses – will have the tax deducted from their salary.

6. Child benefit

If you received child benefit payments in 2023-24 and you or your partner earned over £50,000, you'll need to pay tax on that income using self-assessment. This is known as the 'high-income child benefit charge'.

The tax charge equates to 1% of the child benefit received for every £100 of income over £50,000, with all benefit lost when a parent’s taxable income reaches £60,000.

So say your income is £56,000 and you have one child, as you are earning £6,000 over the threshold you will need to pay 60% of your child benefit back as a tax charge.

7. Lodger income

If you rent out a room in your own home to a lodger (on a long or short term basis), you may need to complete a tax return. Under HMRC's 'rent-a-room' relief scheme, individuals can make up to £7,500 (or £3,750 each if they share income from the property with someone else) a year without paying tax. But if you end up earning more than that allowance from your tenant, then you'll need to pay tax on the extra income.

The income limit covers everything you charge your tenants as part of the rental service – so if you charge them for cleaning, meals or laundry you'll need to count these fees, too.

If you claim tax relief through the rent-a-room scheme, you can't also use the £1,000 property allowance for income on this property. 

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How do I check if I need to complete a tax return?

If you don't currently complete a tax return and think you might need to, you can use HMRC's online tool to check, or contact HMRC directly.