Although not everyone is required to file a self-assessment tax return, there are a few circumstances in which you may be compelled to do so, even if you are an employee who has tax taken at source from your salary. It’s crucial to be aware of scenarios where a tax return is required because HM Revenue & Customs (HMRC) might levy penalties if you fail to send one on time. Below we’ve listed some common circumstances where you’ll need to file a self-assessment tax return…
- If you earned more than £1,000 as a self-employed person (say from a side hustle or hobby business outside of your regular employment), or if you are employed and may have self-employed earnings, or if you are a partner in a business partnership, you must always file a self-assessment tax return with HMRC.
- If you have made capital gains or have untaxed income, you may need to file a self-assessment tax return with HMRC.
- If you have received earnings through the rental of a property, income from savings, investments and dividends or even foreign income.
If you can say yes to any of these points then it is necessary for you to file a self-assessment tax return?
You may not need to file a return if your earnings from the foregoing sources fall below specified thresholds. However, the income could still be taxed. A decent rule of thumb is that a tax return is required unless the income is tax-free, covered by your tax allowances, or tax has been collected through your PAYE code. BUT always double-check the situation, and if you’re unsure, HMRC offers easy-to-use online tools to see if a return is required. For instance for…
Child benefit recipients with higher incomes
If you or your partner earns more than £50,000 and receives Child Benefit, HMRC will force you to file a self-assessment tax return and pay a tax penalty known as the ‘High Income Child Benefit Charge.’
Landlords who make a profit from their rental properties
The majority of landlords who receive rental income will be required to file a tax return.
It is critical for landlords with unreported rental revenue to rectify this as soon as possible. HMRC has a special Let Property Campaign for landlords who are late on their tax filings, which is fantastic news.
You can usually expect a smaller penalty and the best available terms if you make a voluntary disclosure than HMRC would otherwise charge.
Landlords should also keep in mind that, as of April 6, 2020, if Capital Gains Tax (CGT) is required on the sale of a UK residential property, the period for filing a report and paying the tax has been reduced to 30 days from the date of the transaction’s completion.
CGT is a complicated tax with numerous dates for reporting and payment, as well as various reliefs that could result in significant savings. As a result, it’s critical that you get expert help.
This list is not exhaustive, but it should give you an idea of the kind of situations that may necessitate filing a tax return.
Do you require assistance in completing your self-assessment tax return?
YES! Then we can assist you. If you are doing your first tax return and are unsure where to begin, the team here at DNA can offer you a wide range of tax assistance for UK taxpayers (self-employed, small business owners, landlords) and we are experienced in dealing with tax returns. There may also be instances where you are not receiving tax reliefs that you are entitled to, therefore if you are a higher rate taxpayer who contributes to a private pension or makes gift assistance payments, we can assist you in claiming all available reliefs.