30 years of self-assessment - more than half of filers say it's a 'nuisance'

• Fewer than half (48%) of those who fill in a tax return have budgeted for their tax bill every year 
• Around a quarter (24%) of those who’ve filled in a tax return in the past say that the amount of tax they owe has been more than they expected 
• Worryingly, 1 in 20 (5%) of those who fill in a return normally use a bank overdraft to pay some or all of their self-assessment tax bill

This year marks 30 years since self-assessment was first introduced, but, three decades later, new research from Royal London shows more than half of those who fill in a tax return (54%) describe it as a ‘nuisance’. Just 2% describe it as ‘therapeutic’, while almost four in ten (38%) say they don’t mind it. Employees are more likely to describe it as a ‘nuisance’ (57%) than those who are self-employed (50%). 

It’s not just the nuisance factor that’s catching people out. The new research from the UK’s largest mutual life, pensions and investment provider found that around a quarter (24%) of those who’ve filled in a tax return in the past say that the amount of tax they owe has been more than they expected, with almost one in ten (9%), saying it’s more than they expected every time they file their return. 

Income tax receipts are expected to rise further thanks to the phenomenon of fiscal drag, where rising incomes and frozen tax thresholds tip greater numbers into higher bands. This latest research shows many find themselves landed with tax bills they hadn’t budgeted for.

While around a quarter (24%) say that their tax bills are more than expected, this rises to 30% among employees. Approximately one in five (22%) self-employed people say that their tax bill is more than expected always or sometimes. However, the percentage who say their tax bill is higher than expected rises to 39% among UK adults who get their partner to fill in their self-assessment tax return compared to 22% of those who fill in their self-assessment tax return themselves. Meanwhile, almost three in ten (29%) of those who use the services of an accountant or bookkeeper say their tax bill has been more than they’d predicted.

The latest figures from HMRC showed that more than 4,600 people chose to fill in their self-assessment tax return on Christmas Day 2025 with a total of more than 37,000 completing their forms online over the three-day festive break between Christmas Eve and Boxing Day. With around 12 million expected to be filed by the January 31st deadline, Royal London’s research revealed a surprising lack of understanding concerning taxpayers’ self-assessment obligations, with one in eight (13%) self-employed respondents saying they would not be filing a return. However, the vast majority (83%) are filing a self-assessment tax return this year.  Under the rules, anyone who is self-employed has to fill in a tax return, unless their income is less than £1,000 a year. 

HMRC imposes penalties if you’re late filling in your tax return and applies further charges if you’re late paying your bill. In Royal London’s survey of 4,000 UK adults, more than half (59%) of those who are employed had set aside cash savings throughout the year to pay their tax bill, compared to almost two thirds (64%) of self-employed respondents.

On a positive note, two-thirds of people (66%) who fill in a tax return or have done in the past say they budget for their tax bill. However, fewer than half do so every year (48%) with a lower percentage of employees saying they always budget (46%), compared to more than half (59%) of people who are self-employed. Overall, it’s more important for people who are self-employed to budget as they pay all of their tax this way, whereas those who are employed are likely to pay most of their tax through PAYE. However, employees shouldn’t ignore or be complacent about self-assessment, as tax bills could be substantial if, for example, they receive taxable benefits through work, have savings held outside a cash ISA receiving more than £1,000 a year in interest (or £500 if they’re a higher rate taxpayer), or have a buy-to-let property.

Almost a third (31%) of adults who fill in a tax return or have done in the past said they don’t budget for their tax bill. Worryingly, 5% of people confess they normally use a bank overdraft to pay some or all of their self-assessment tax bill.  

Sarah Pennells, consumer finance specialist at Royal London commented:

“It’s concerning that there’s so much confusion about the self-assessment system 30 years after it was introduced, particularly about who needs to fill in a self-assessment tax return.  If you’ve had income that you’ve not been taxed on, the chances are you’ll need to fill in a self-assessment tax return, unless it’s something like dividend income from investments held within an ISA, which is free of income tax. There’s plenty of information online that explains what you need to do.  

“It’s a good idea to build some financial resilience by setting aside some money in a savings account. Look at the total tax you owed this year, from your July and January instalments, and put away a twelfth of that every month in a savings account to prepare for your next filing. If you know you’re earning more this year, you may need to increase your monthly savings. Best buy easy access savings accounts are paying up to 6% interest, so if you start saving now you may even have a bit of extra interest this time next year.”

Royal London’s findings come as self-assessment taxpayers are reminded that they face “payments on account” for the year ahead – as well as settling their taxes for the year just gone.

Self-assessment taxpayers must make the two annual payments on account, 31 January and 31 July, unless their last tax bill was less than £1,000 or they paid more than 80% of the previous year’s tax owed. Each payment is half your previous tax year’s bill. 

However, from April, there is a big shake-up to the tax system for people who are self-employed and landlords, with the introduction of ‘Making Tax Digital.’ This requires people who are self-employed and landlords to keep digital records and to file updates to HMRC every three months. The change initially affects landlords and the self-employed with an income from self-employment or renting out property, of over £50,000. This income threshold gradually reduces until it reaches £20,000 in April 2028. People using Making Tax Digital will still have to file a tax return the following January and pay tax they owe. 

Sarah Pennells added:

“With Making Tax Digital being phased in from April, there shouldn’t be the same shock tax bill in January as, once you’ve submitted your quarterly update to HMRC, you’ll get an estimate of how much tax you owe. However, the tax you owe will still need to be paid in January, and you could face penalties and interest if you can’t or don’t pay.”