Do you need to complete a Tax Return?
Over the past few months several of our clients have received letters from HMRC advising that they no longer need to complete Tax Returns. Usually, as you might expect, receiving this letter is a relief as it removes an annual admin burden. However, these letters cannot be relied upon to be accurate and if it turns out you should have submitted a tax return afterall, then HMRC can still charge interest and possibly penalties on the late paid tax.
It is worth noting that, unlike in some countries, not everyone in the UK must file tax returns to HMRC. As an example a person exempt from submitting a tax return might be an employed person with minimal investment income. They would not need to submit a tax return as their income would be taxed at source through PAYE.
The majority of UK taxpayers do not submit tax returns.
So, who needs to submit and complete a tax return?
HMRC’s guidance states that one of the reasons you need to submit a UK Tax Return is if your main source of income is from a salary and if this is over £100,000. HMRC have increased this threshold to £150,000 for the 2023/24 tax year, however, it is important to emphasise that this is just guidance and it is not based on the UK tax legislation.
The guidance below sets out who HMRC believe should submit and complete a Tax Return:
- Business owners with an income of more than £1,000 (excluding any expenses).
- Partners who are in partnerships.
- People who receive rental income more than £1,000 (excluding any expenses).
- Company directors with income on which tax is due that is not taxed under PAYE.
- People with untaxed income on savings and dividends which are more than personal savings and dividend allowances.
- People with Capital Gains Tax to pay or who have made disposals of more than £12,000 in the year.
- People who need to make a claim for the remittance basis.
- People with total income over £150,000 per annum (up to 2022/23, this threshold was £100,000).
- People who receive more than £10,000 in dividends or interest on investment.
- People with income is between £50,000-£100,000 (or over £60,000 for 2024/25 onwards) and who claim Child Benefit.
The above list is just a summary and is not exhaustive. We would advise that you check whether you need to file a Self-Assessment tax return to HMRC. You can read more here. https://www.gov.uk/check-if-you-need-tax-return
It is worth noting that tax legislation simply says you are obliged to submit and complete a Tax Return if you have been issued one by HMRC or you have tax to pay and in which case you must register to do so. So, in short, if you have tax to pay you should be filing a UK tax return.
So, going back to our original point, if you have received a letter from HMRC advising that you do not need to complete a UK tax return, in our experience the majority of taxpayers who receive these letters still do NEED to file their tax returns to HMRC. In the majority of cases they either meet one of the criteria above or they have tax to pay. If you receive one of these letters from HMRC, before you delete your HMRC Gateway account or destroy your paper tax return, please contact your tax adviser, or the RPGCC tax team to ensure that this correspondence does indeed match your personal tax circumstances.
If you would like to discuss self-assessment, tax returns, or your exemption from filing a tax return, please contact us or telephone us on 020 7870 9050.
