Who Needs To File Tax Returns
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If you are self-employed or starting a new business, you may be unsure of who needs to file tax returns. This article looks at the responsibility of business owners to inform HMRC of their earnings.
Who must send a tax return?
It can be stressful and confusing to file tax returns. We hope that the information below will help find out who should send them, what a Self Assessment is, how to register for one, important deadlines, and what records to keep.
You must send a tax return to HMRC by filling out a Self-Assessment form if you have any untaxed income from savings, investments, dividends, COVID-19 grants, COVID-19 support payments, or money from renting out properties, tips, commissions, or foreign income.
If you are self-employed and earn more than £1,000, are a partner in a business partnership, or need to prove your self-employed status, you must also send a return.
Sending a tax return allows you to claim income tax relief for personal pensions, charity donations, maintenance payments, tax-free childcare, or maternity allowance.
If you get Child Benefits and your income is over £50,000, you must pay a High-Income Child Benefit charge by sending a return.
If the only income you have is from wages or pensions, you will not need to send a tax return.
What is Self Assessment (SA100)?
The Self Assessment, also known as an SA100 form, is a tax return form and a way of calculating your tax liability. It is the responsibility of completing the annual tax return on the person that uses an SA.
Upon filling in the Self Assessment, you will need to include all your taxable income, including any capital gains, claim allowances, and reliefs. See "What records do I need to keep for tax returns?" below for details.
If you must inform HMRC about your different incomes, there are supplementary forms. The different types of income include business partnerships, capital gains, employees or company directors, foreign income or gains, self-employment, non-UK residents or dual residents, and UK property income. Each form is alternatively known by its code.
What are the important deadlines and dates for Self Assessment?
You must complete your tax return to HM Revenue and Customs before the following deadlines. Failure to do so will result in paying a penalty fee and require you to appeal against the penalty if you provide a valid justification.
There are four main deadlines when using a Self Assessment. There are deadlines on:
- 5th of October 2022
- 31st of October 2022
- 31st of January 2023
The date of the 5th of October 2022 is important to remember, as you must register on a Self-Assessment form if your status is self-employed, not self-employed, a sole trader, or a partner. If you fill in a physical SA100 form, the 31st of October 2022 is your deadline to send it by.
Alternatively, if it is an online form you completed, you have until the 31st of January 2023 to submit them. Any tax that is owed for the previous tax year must be paid by the 31st of January 2023.
The UK tax year runs from 6th April to the following 5th April. Anyone required to file a tax return for the previous tax year will receive notice in April.
If you make advance payments, officially phrased as payments on account, then the 31st of January and the 31st of July in the same year are the deadlines to pay the first and second instalments.
If you need HMRC to collect tax through your tax code, then you must submit your tax return online by the 30th of December.
What records do I need to keep for tax returns?
You must keep a variety of records and certificates to submit accurate and correct tax returns.
Keeping official proof is what will help you avoid paying interest for not paying enough tax or penalties for misinformation.
These records can be physical, digital, or filled in as part of a software program.
Business records must be kept for at least five years from the date of the 31st of January. For example, the year 2027 will require records from 2020/21.
Those that are self-employed are required to send proof of all business income and outgoings
That includes all sales, VAT records if you are registered, PAYE if you employ others, personal income records, and any grants such as how much you were paid by the Self-Employment Income Support Scheme.
The types of proof you are allowed to provide include bank statements, bank slips, chequebook stubs, stock receipts, sales invoices, and till rolls.
If you let out your property, it is necessary to provide all details of rental income, including dates, all rent, if you have charged for maintenance or repairs, allowable expenses you pay to run the property like cleaning or gardening, rent books, receipts, invoices, and bank statements.
If you do not have any evidence from your bank, you can ask them for copies of statements and receipts.
It is important to keep any employment documents that discuss your pay and tax, consisting of P45 forms for pay and tax for the day you left a job, P60 forms for pay and tax for the tax year you were employed in, P11D forms for expenses and benefits involving health insurance and company cars, P160 (Section 1A) for proof when your pension started, state pension details with tax deductions, certificates for any Taxed Award Schemes (TAS), and information about termination or redundancy payments.
If you do not have any of the above forms or proof, you should contact your employer as they are the only ones who can supply them for you.
Proof of any other income and benefits will be beneficial.
For example, if you have any tips that have not had tax deducted already by your employer; benefits that are connected to your job, such as meal vouchers; or lump-sum payments such as incentive payments, that are not included in your P45 or P60 forms, will ensure that you do not pay any interest.
Further useful documentation to offer correct information includes expense records of tools for work, travel costs, and specialist clothing, and documents relating to Jobseeker's Allowance, social security benefits, statutory adoption, maternity, paternity, and sick pay.
Those who have income from employee-share schemes and share-related benefits will need copies of share-option certificates, exercise notices, details of what you have paid for shares and when, letters about any option changes, and proof of benefits that you may have received as an employee shareholder.
If you have received any income from overseas, you will need to state such details.
You can do this by providing information from bank statements, payslips, dividend certificates, proof of tax already paid overseas, and payment confirmations of income you have earned from foreign companies.
Additionally, if you wanted to claim any receipts of overseas expenses, you could reduce your tax bill.
How to register for a Self Assessment tax return?
You can register and complete a Self Assessment tax return, and you must start by filling out the digital or physical SA100 form. If you require assistance, you may get advice from an accountant, contact HMRC directly with queries, or use the help sheets provided on www.gov.uk.