Who Needs to File a Tax Return?
Self-Assessment is the system that was created by HM Revenue & Customs (HMRC) to ensure the correct amount of tax is collected for a tax year. You should therefore check each year whether you need to submit a self-assessment tax return.
How can I determine if I need to file a tax return?
The concept of self-assessment was introduced by HMRC with the intent of meticulously ascertaining and accumulating the accurate quantum of taxation on an annual basis. This intricate mechanism encompasses the levying of income tax, National Insurance contributions, and the imposition of capital gains tax (CGT). Its purview is primarily directed towards individuals whose income or proceeds from asset sales are not subject to immediate taxation at the source.
Self-assessment is strategically designed to focus on individuals who meet the following stringent criteria:
- Self-employed individuals whose earnings surpass the threshold of £1,000.
- Partners actively engaged in a business partnership.
- Individuals with an annual income exceeding £100,000, and this threshold is set to escalate to £150,000 in the near future.
- Aspirants seeking to lay claim to specific income tax or capital gains tax exemptions.
- Recipients of specific COVID-19 grants or support payments.
- Landlords deriving income from the rental of properties.
- Earnings derived from gratuities and commissions.
- Income accrued from savings, investments, and dividend disbursements.
- Income originating from foreign sources.
- Individuals receiving child benefits, provided their income surpasses the £50,000 threshold.
- Non-resident individuals with taxable income within the United Kingdom, including landlords residing outside the UK.
It is imperative to note that this enumeration does not represent an exhaustive list. In this discourse, we shall delve further into these select categories, all of which necessitate the diligent completion of a self-assessment tax return.
Individuals whose entire income stream is subject to withholding tax mechanisms, such as the Pay As You Earn (PAYE) system, and whose annual earnings fall below the £100,000 threshold (soon to be revised to £150,000) are exempt from the obligation of filing a tax return. Nonetheless, it is prudent to ensure annual compliance, even for this substantial portion of the populace, to uphold fiscal responsibilities diligently.
Discover the crucial deadline for filing your tax returns!
If the need arises for you to furnish a self-assessment tax return, it is imperative that you acquaint yourself with pivotal deadlines.
In the United Kingdom, the tax year commences on the 6th of April and concludes on the 5th of April in the subsequent year. Consequently, individuals must engage in a thorough examination of their tax circumstances during this timeframe to ascertain the necessity of a tax return submission.
For those embarking on their maiden voyage into the realm of tax return submission, the primary step involves registering for self-assessment. This obligatory procedure must be executed by the 5th of October, following the conclusion of the tax year in which a tax return is mandated. For instance, if the requirement arises to submit a tax return for the tax year culminating on the 5th of April 2023, the imperative action of self-assessment registration must be accomplished by the 5th of October 2023.
In the event that you opt for the traditional paper-based tax return submission, the dossier must grace the hands of HMRC no later than midnight on the 31st of October, following the tax year’s culmination. Conversely, for those electing to employ the online avenue, be it through their Government Gateway account or commercial software, the deadline for tax return submission is extended, permitting respite until midnight on the 31st of January, following the cessation of the tax year.
It is of paramount significance to fathom that the information proffered to HMRC must be both precise and comprehensive. This veracity serves as the keystone, confirming your fiscal responsibility for the entire year. Therefore, meticulous attention to detail is an indispensable requisite, ensuring that you neither overpay nor underpay your tax dues for the fiscal year.
Submission and Payment
In the event that you are encumbered with a fiscal liability for the pertinent tax year, it necessitates that this obligation is discharged to HMRC by the 31st of January, ensuing the cessation of the tax year. It is noteworthy that this date aligns with the submission deadline for online filing.
Additionally, it warrants emphasis that in select scenarios, an individual may find themselves obligated to make interim payments on account towards their fiscal responsibility for a given year. The calculation of this obligation transpires during the completion of the tax return for the preceding year. This is grounded in the presumption that your financial status remains consistent from one year to the next.
However, it bears mentioning that payments on account are rendered superfluous under the following circumstances:
- If your prior tax liability amounted to less than £1,000.
- In instances where, during the previous tax year, you remitted over 80% of your tax obligations directly at the source, as exemplified when income tax is deducted through your PAYE tax code.
For instance, as you navigate the process of completing your tax return for the fiscal year 2021/22, payments on account may become pertinent for the subsequent fiscal year, 2022/23. These interim payments must be submitted no later than the 31st of January 2023 and the 31st of July 2023. Subsequently, these payments will be incorporated into the computation of your ultimate balancing payment for the fiscal year, which is slated for settlement on the 31st of January 2024.
Summary of Important Deadlines
We summarise the necessary deadlines for the 2022/23 tax year to be as follows:
|Tax year||6th April 2022 – 5th April 2023|
|Registration for self-assessment||5th October 2023|
|Submission of paper tax return||Midnight 31st October 2023|
|Submission of online tax return||Midnight 31st January 2024|
|First payment on account||Midnight 31st January 2023|
|Second payment on account||Midnight 31st July 2023|
|Balancing payment of tax for the year||Midnight 31st January 2024|
If you happen to miss any of these deadlines, HMRC has the authority to impose penalties for your failure to comply. Additionally, HMRC can apply interest charges to any unpaid taxes at the rates specified by them. You can find detailed information about these interest rates on their official website.
Nevertheless, if you have a valid and “reasonable excuse” for not meeting the required deadline. You have the option to file an appeal with HMRC. This appeal process allows you to explain your circumstances and provide evidence supporting your claim for why you were unable to meet the deadline. HMRC will then assess your case and determine whether your excuse is acceptable, potentially waiving or reducing any penalties or interest charges that would otherwise apply.
It’s essential to follow the established procedures and guidelines set by HMRC when appealing to ensure your case is reviewed fairly and with due consideration of your circumstances.
Do I need to do a tax return if I earn under £10,000?
Whether or not you are required to file a tax return when your earnings are below £10,000 depends on the nature of your income for the year.
If you meet any of the following criteria, you will need to file a tax return:
- Landlords earning more than £2,500 in property income. If your rental income falls between £1,000 and £2,499, please reach out to HMRC to confirm your reporting obligations.
- Self-employed individuals with income surpassing the £1,000 trading allowance.
- If your entire £10,000 income came from investment sources, such as savings and dividends.
- You received untaxed income exceeding £2,500.
There are various reasons to complete a tax return, and if you have any concerns, feel free to contact us or get in touch with HMRC.
How do I send my tax return?
After completing your registration for self-assessment and receiving the Unique Taxpayer Reference (UTR) number from HMRC, you can proceed to file your tax return.
HMRC advises that if you do not possess a UTR number, you should allow for a 20-working-day issuance period. This is important to factor in, especially if you’re submitting your tax return for the first time.
You have several options for submitting your tax return to HMRC. You can do it online through the Government’s website, utilize commercial software, or send a paper SA100 form along with the required supplementary pages.
The method you choose for submitting your return will affect how your liability for the year is calculated and by whom. If you opt for commercial software or online submission, your liability will be automatically calculated. However, if you submit a paper return, HMRC will calculate your liability based on the information you provide. Once processed, HMRC will send you a tax calculation detailing your liability and any payment due dates.
Filing Your Tax Return: Important Considerations and Deadlines
If you decide to file a paper return, it must reach HMRC by midnight on the 31st of October following the end of the tax year. This allows HMRC sufficient time to process your return before the payment due date of January 31st. Missing this deadline can result in penalties for late filing and potential late payment.
It’s important to note that the nature and amount of your income can impact your income tax liability for the year. Additionally, if you sell a capital asset. You may need to assess capital gains tax, which follows a different set of tax rates. For example, this applies to the sale of shares or a second home.
Submitting your tax return late or failing to pay your tax bill by the deadline can lead to interest charges and potential penalties. To avoid unnecessary penalties and interest, it’s advisable not to wait until the last minute to file your return.
Get support and advice with your tax return from Account Ease?
To ensure the accuracy and timely submission of your self-assessment tax return. You can choose to enlist the services of an accountant.
At Account Ease, we offer a fixed and competitive rate, relieving you of the burden of self-filing. Our services encompass calculating your tax liability, submitting your return, and coordinating with you regarding payment schedules.
To schedule your complimentary initial consultation. Pease reach out to us today at 0208 133 4599 or complete our online inquiry form.