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May 27th 2016 / BY: Wisteria

Tax Returns – should you join the crowd?

Now that May 31st 2016 has come and gone, if you are an employee of a company, your employer would (and most definitely) should have given you a piece of paper which detailed exatctly how much you were paid in the last financial year (if not, then it is highly recommended that after you have finished reading this article, you make an enquiry to your company’s HR department). This document is what is more commonly referred to as a P60.

If you are lucky enough to have received a gross annual salary for 2014/15 which has a six-figure sum in it, then although you paid by your company via a PAYE / payroll scheme, it is in fact a legal obligation that you join the 10 million or so population who currently file a self-assessment tax return each year to HM Revenue and Customs (HMRC). Failure to comply with this obligation could lead to HMRC chasing you for these returns and more significantly, levying penalties and interest for failing to do so.

Here are just a few of the reasons why you may need to prepare and file a self-assessment tax return.

  • Your total annual income exceeds £100,000 – the reason why you would need to complete a self-assessment tax return in this instance is due to the possibility of a restricted tax free allowance as your income exceeds this threshold.
  • You are a company director – this is typically when you incorporate a new business, or are appointed a director of a UK Limited Company. There are of course situations in which you will not need to prepare a return but this is typically when you are a director for a non-profit organisation (such as a charity) and you do not receive any pay or benefits.
  • You do not live in the UK but receive UK sourced income – which could take the form of UK employment income, UK bank interest (savings income), pension income or rental income.
  • You are self-employed trader and are not remunerated by an employer company through PAYE or payroll.
  • Your income during the year (or your partner’s) exceeded £50,000 and one of you claimed the child benefit in a given year. This is so that tax can be repaid to the UK government as a result of the high income child benefit charge which was recently introduced.
  • You make a capital disposal (of assets such as a property or shares) and this results in a capital gain. There will of course be some situations when you make a capital gain but are not required to file a self-assessment.
  • You own a property in the UK which you rent out. You will be required to be declared the total income received and after deducting relevant expenses, you then declare and pay the associated tax to HMRC.

This is by no means an exhaustive list but rather an indication of a few scenarios in which you may be required to prepare and file a tax return.

For the 2015/16 tax year that has just passed, it is not still too late to notify HMRC of your obligation to do so. Although you have until October 6 2016 to do this, we of course recommend that you do this as soon possible.

This will ensure that you are not late registering and will not be likely to receive a late notification penalty from HMRC.

How can Wisteria help?

Wisteria are of course more than happy to assist you with notifying HMRC if you are now obliged to file a return to HMRC and will also make sure that you do not join the 860,000 taxpayers who filed their returns late in January 2016! Contact us for more information.