If you are a taxpayer with relatively straightforward tax affairs, who pays tax through the Pay As You Earn (PAYE) system, you probably won’t need to complete a self-assessment tax return. However, there are certain circumstances in which you will need to complete a tax return. If you fulfil certain criteria you will usually be notified by HM Revenue & Customs, but if you know you need to complete a tax return, you should inform HMRC as soon as possible to avoid a penalty charge being issued for failure to notify.
If you are self-employed, either as an individual or a partner in a partnership, you need to complete a tax return. The main tax return which needs to be completed is a form SA100, although there are supplementary pages for different requirements. If you are a director of a company, a minister of religion or a member of Lloyds you must register for self-assessment and complete a form SA100. If you receive income from property, savings or investments which are over a certain level, you must inform HMRC and register for self-assessment.
Pensioners aged 65 and above may need to complete a form SA100 if their income is above a specified level, which will result in their age-related allowances being reduced. However, if you have only one source of income in addition to the state pension, it may be possible to remain in PAYE.
Foreign income which is liable to tax in the UK must be declared using a form SA100. Income which exceeds £100,000 must also be declared by filling in form SA100. If you are an employee but want to claim expenses or tax relief for professional subscriptions which amount to more than £2,500, you must fill in a self-assessment tax return. A claim for expenses which is below £2,500 can be dealt with by sending in a letter or calling HMRC. There are other forms of relief which can only be claimed for by completing a self-assessment tax return. Examples include Venture Capital Trusts or Enterprise Investment Scheme relief.
If you pay tax through the PAYE system but haven’t paid enough tax during a tax year, you may have to complete a self-assessment tax return. An underpayment of tax can happen for several reasons and will usually be collected through your PAYE tax code the following year. However, if the amount is more than £3,000 or you have insufficient income to collect the underpayment and are unable to make a voluntary payment, you may be asked to complete form SA100.
If you believe that you need to complete a form SA100, contact HMRC and register for self-assessment. You will be given a Unique Taxpayer Reference number which must be used on all communications. You can submit your tax return online or complete a paper copy. The deadline for submission of a paper tax return is 31st October or if you received the tax return after 31st July, the deadline will be three months after the date shown on the letter. Online tax returns must be filed by 31st January, unless you received the letter of notification for filing a return after 31st October. Your filing deadline will then be three months after the date shown on the letter.
There are many types of tax return and supplementary pages, all dependent on your circumstances. Ensure that all supplementary pages are submitted to HMRC along with the form SA100, in order to avoid a penalty being issued. If you fail to notify HMRC that you should complete a self-assessment tax return, you will be charged a penalty.
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