Who needs to file a tax return?

This article outlines who needs to submit a tax return, how to file your self-assessment return, key dates you need to be aware of and payment deadline dates.

How do I know if I am required to file a tax return?

Self-assessment was introduced by HMRC to ensure the correct amount of tax is calculated and collected each year. The system collects income tax, National insurance and capital gains tax (CGT). It is aimed at those with income or sales of assets not taxed at source.

Self-assessment aims to target individuals meeting the following criteria:

• the self-employed earning more than £1,000,
• partners in a business partnership,
• individuals earning £150,000 or more,
• individuals wanting to claim certain income tax or capital gains tax reliefs,
• landlords earning income from letting property,
• earnings from tips and commission,
• income received from savings, investments and dividends,
• income from an overseas source, and
• individuals receiving child benefit with income exceeding £60,000.
• you are non-resident and you have taxable income in the UK. This includes non-UK resident landlords.

This is not an exhaustive list but in this article, we expand on these groups that are required to complete a self-assessment tax return.

Individuals with income taxed entirely at source, such as Pay As You Earn (PAYE), earning less than £150,000 will not be required to complete a tax return. This therefore covers many individuals in the UK, however, an assessment should be duly completed each year to ensure that you are compliant.  

When do tax returns need to be submitted?

If you need to submit a self-assessment tax return, there are key deadlines which you need to be aware of.

The UK tax year runs from 6th April to the 5th April the following year. Individuals will therefore need to assess their tax position during this period to establish whether a tax return is due.

If you are submitting a tax return for the first time, you will firstly need to register for self-assessment. This must be completed by 5th October following the end of the tax year for which a tax return is required. For example, if you need to submit a tax return for the tax year ended 5th April 2024, you will need to register for self-assessment by 5th October 2024.

If you are submitting your tax return on paper this will need to be with HMRC by midnight on 31st October following the end of the tax year. For those submitting their returns online, either using their Government Gateway account or commercial software, the deadline for submitting your return is extended to midnight on 31st January following the end of the tax year.

As you will appreciate, the information you supply to HMRC must be correct and complete, as this confirms your liability for the year. Attention to detail is therefore key to ensuring you do not over or under pay any tax for the year.

Should you have a liability for the relevant tax year this will need to be paid to HMRC by 31st January following the end of the tax year (this being the same day as the submission deadline for online filing).

It is also worth highlighting that in some instances, an individual will be required to make a payment on account towards their liability for a year. This is calculated when you are completing your tax return for the previous year, as it is expected that your income position will be the same year on year.

Payments on account will not be required if the following apply:

• Your previous tax liability was less than £1,000.
• In the previous tax year, you paid more than 80% of your tax due at source, for example if you pay income tax through your PAYE tax code.

For example, when completing your 2022/23 tax return, payments on account have arisen for the 2023/24 tax year. Your payment on account deadlines will subsequently be 31st January 2024 and 31st July 2024. These payments will be taken into account when calculating your final balancing payment for the year which is due on 31st January 2025.

We summarise the necessary deadlines for the 2023/24 tax year to be as follows:

Self-Assessment	Deadline
Tax year	6th April 2023 – 5th April 2024
Registration for self-assessment	5th October 2024
Submission of paper tax return	Midnight 31st October 2024
Submission of online tax return	Midnight 31st January 2025
First payment on account	Midnight 31st January 2024
Second payment on account	Midnight 31st July 2024
Balancing payment of tax for the year	Midnight 31st January 2025

If any of these deadlines are missed, HMRC can charge you a penalty for failure to do so. Alongside this, HMRC will charge interest on any unpaid tax at their specific rates. More guidance on these rates can be found here.

However, should you have a ‘reasonable excuse’ for failure to meet the necessary deadline, an appeal can be made to HMRC.

Missing your tax return submission deadline can be daunting, but it easily rectified. Our guidance on what to do in this situation can be found here. 

Do I need to complete a self-assessment?

HMRC guidance states a self-assessment tax return will need to be submitted if any of the following conditions apply:

• Self-employed individuals (sole traders) earning more than the £1,000 trading allowance.
• Partners of a business partnership.
• Individuals earning income which has not been taxed at source, such as dividends, interest or rent.
• Landlords earning property income which exceeds the £1,000 property allowance or rent a room relief.
• Individuals earning more than £150,000.
• Employees wanting to claim relief for employment expenses over £2,500 in a tax year (a form P87 can be submitted for expenditure less than £2,500 in a year).  
• A household receiving child benefit, with one family member earning more than £60,000, and therefore subject to a child benefit income tax charge for the year.
• Those earning savings income exceeding the personal savings allowance of £1,000 for basic rate taxpayers or £500 for higher rate taxpayers.
• Individuals earning dividend income exceeding the dividend allowance (set at £1,000 for the 2023/24 tax year and £500 for the 2024/25 tax year).
• An individual in receipt of foreign income on which UK tax is payable.
• Non-resident individuals earning untaxed UK income, such as rental income.
• Individuals that have made excess pension contributions during the year exceeding their available annual allowance resulting in an annual allowance income tax charge.
• Individuals receiving income from a trust, settlement or estate on which income tax is payable. In some cases, an income tax repayment may instead arise which will result in a form R40 being submitted. HMRC guidance on what is required can be found here. 
• If you have capital gains tax (CGT) which needs to be assessed, more specifically:
  - sell or give away capital assets worth more than £50,000
  - you have a taxable gain which exceeds your CGT annual exempt amount
  - you want to claim a capital loss which has arisen in the year and you are already in self-assessment
  - you want to claim a CGT relief to mitigate your exposure to CGT.

Unfortunately, HMRC will not tell you if you need to complete a tax return, it is  an individual’s responsibility to assess. To assist individuals in establishing whether a tax return needs to be submitted HMRC has an online checker.  Alternatively, you can contact us for guidance on whether a return is due.

For those required to complete a tax return, records will need to be maintained and kept for specified periods of time in line with the HMRC guidance. If you are self-employed you will need to keep your tax return records for a minimum five years following the 31st January submission. For everyone else, tax return records should be kept for one year following the 31st January submission.

Do I need to do a tax return if I earn under £10,000?

Whether or not you need to complete a tax return while earning less than £10,000 will depend on the type of income you have received in the year.

If you fall into the following criteria a tax return will need to be completed:

• Landlords earning property income exceeding £2,500. For those individuals earning rental income between £1,000 and £2,499 you should contact HMRC to confirm your reporting obligations.
• Self-employed individuals with income exceeding the £1,000 trading allowance.
• Your total £10,000 was from investment income, such as savings and dividends.
• You received untaxed income exceeding £2,500.

There can be many reasons to complete a return and if you have concerns, speak with us, or contact HMRC.

How do I send my tax return?

Once you have registered for self-assessment and HMRC has issued you with the necessary Unique Taxpayer Reference (UTR) number, you can file your tax return.

HMRC states that if you do not have a UTR number, you should allow 20 working days for this to be issued which you will need to take into account if you are submitting a tax return for the first time.

Your tax return can be submitted to HMRC either online via the Government’s website, using commercial software, or by submitting a paper SA100 form along with the necessary supplementary pages.

How your return is submitted will impact how and who calculates your liability for the year. If you submit your return using commercial software or online, your liability will be calculated automatically for you. However, if your return is submitted on paper, HMRC will calculate your liability based on the entries stated on your return. Once processed, HMRC will send you a tax calculation confirming your liability and any payment due dates.

Should you opt to file your return on paper, this will need to be with HMRC by midnight on 31st October following the end of the tax year. This is to ensure that HMRC has time to process your return before the 31st January payment due date. Should this deadline be missed, late penalties will be issued for late filing and potentially late payment.

As you will appreciate, the amount and type of income you earn will alter your income tax liability for the year. Of course, should you sell a capital asset, capital gains tax may need to be assessed which will result in a different set of tax rates. For example, if you sell shares or if you sell a second home.

If you submit your tax return late or do not pay your tax bill by the deadline, you will be charged interest and you may have to pay a penalty. To ensure you meet the necessary deadlines for filing your return and avoid any unnecessary penalties or interest arising we recommend you do not leave it until last minute. There are clearly many benefits in doing so, which we detail here. 

Need help?

To provide you with the reassurance that your self-assessment tax return is correct and submitted on time you have the option of using an accountant.

At TaxAssist Accountants we provide a fixed and competitive price, taking away the hassle of completing this yourself. We will calculate your tax liability, file your return and liaise with you on the amounts to be paid and when.

To book your free initial consultation, contact us today on 01257 277 999 or fill in our online enquiry form.

Last updated: 17th September 2024