When do you need to submit a self-assessment?

When do you need to submit a self assessment?

Despite ongoing consultations and efforts to simplify the system, many taxpayers are still left unsure of what it is they’re meant to do.

Since filing a self-assessment late carries a hefty penalty fee, knowing when you’re required to complete a tax return is very important.

The chances are that, if you completed a self-assessment for the last tax year, you’ll need to do it again this year. HMRC tend to issue letters informing people when completing Self Assessment forms are no longer necessary, and they actively urge taxpayers to tell them as soon as their situation changes.

A spokesperson for HM Revenue and Customs stated “people with slightly more complex affairs may have to fill in a tax return but it all depends on their personal circumstances.

“We don’t want anyone to fill in a tax return unless it’s absolutely necessary.”

So, how do you know if it is necessary for you? HMRC will judge whether or not they need you to complete a Self Assessment based on a few different factors. Here are some of the more important points to consider –

Your income

As a rule, anyone with a taxable income of more that £100,000 will automatically be required to fill out a self-assessment form.

If you make any income over £10,000 from savings, investments or shares, you’ll also need to report it to HMRC.

Say you sold your holiday home or some shares to your business in the last year. You would need to disclose that income on a self-assessment in order to pay the Capital Gains Tax that you owe.

In most cases, though, if your only income comes from your wages as a non-shareholding employee/director or pension, you won’t need to submit a return.

Your role

If you’re self-employed, or were self-employed at any point over the past tax year, you will need to submit a Self Assessment. You will be allowed to deduct some allowable business expenses from your income before working out how much you owe in tax.

Company directors also need to complete a Self Assessment unless they work for a non-profit organisation and do not receive any pay or benefits. Trust and registered pension scheme trustees must complete tax returns.

As a landlord, you may not think of yourself as self-employed or as a business owner. But, in HMRC’s eyes, you are. You must report all income you receive in rent but you will be able to deduct revenue expenditure from your profits to reduce your tax liability.

Depending on your individual circumstances, you may need to send a return even if you do not fall into any of these categories. For example, religious ministers and Lloyd’s underwriters are also liable for self-assessment.

Other types of income

Even if your usual income does not meet the HMRC criteria for requiring a Self Assessment, other factors may mean you still need to fill out a tax return.

This could include your partner’s income too. If one of you makes more than £50,000 a year, and either you or your partner are claiming child benefit at the same time, you will need to report it on a self-assessment form.

Income from overseas is also taken into consideration. Any tax owed on income in other countries must be put on your tax return. Even if you were living abroad yourself, you’ll need to pay the tax on any UK income you made during that time.

If you have received a P800 from HMRC saying you didn’t pay enough in the last tax year, and you have not already payed what you owe through your tax code or voluntary payment, it will be added onto your total tax bill.

Work with us

In any case, if you receive a letter or HMRC telling you to send in a tax return, you must submit the form. Even if you don’t have any tax to pay, going against HMRC could result in fines or even trigger an official investigation.

The Self Assessment process can seem daunting, especially with new tax changes being announced every year. If you need any advice or guidance through submitting your tax return, speak to us today on 01872 271655, or email us on enquiries@kelsallsteele.co.uk