Most people in the UK are spared the hassle of having to complete a Tax Return. That is because the PAYE system which applies to salaries and wages gets roughly the right answer if the PAYE code number is correct.
The self-employed and landlords receiving rents are two of the groups of people who will be required to submit a return. The principle behind this is that, if you are likely to owe the taxman money, then he wants a Tax Return.
Of course, HMRC does not always know in advance if you will owe money. Despite suggestions to the contrary, there are no psychic powers in the tax office! Your circumstances might change from year to year. This means that even if you do not receive a Tax Return after the end of the tax year, the obligation is on you to ask for one if there is tax to pay. You have to work this out yourself and you are meant to do this by 5 October after the end of the tax year.
This has been particularly important this year as another big category of people has been added to those who should submit Tax Returns. From last January, Child Benefit has been clawed back through the tax system for households containing someone with income over £50,000. The charge is on a sliding scale and all the Child Benefit goes for incomes over £60,000.
There will be a lot of high earners with children who will need a Tax Return for the first time this year.
Of course, we are already past 5 October so, if you haven’t told HMRC, do you have a problem? Strictly speaking a penalty or fine can be levied but recent public comments by HMRC boss Lin Homer seem to indicate that what they really want is for people to register and then pay the tax (due on 31 January 2015). Let us hope that a sensible approach is indeed taken and a hard line is not taken with tax penalties.
That does not mean that it is safe to sit back and worry about it after Christmas.
Before you can file a Tax Return you need a self assessment reference or ‘UTR’. This can takes weeks to get out of HMRC and the process should be started now.
You also have to get together details of all of your income including salary, bank interest, dividends etc. for your Tax Return – and this can take some time as can filling in the form. That is why many people ask accountancy firms like Armstrong Watson to do the task for them.
The final part of the Tax Return submission process involves calculating the tax. The payment is not due until 31 January but this could neatly coincide with the arrival of your Christmas credit card bills. My tip is to make sure you know what the January tax bill is before you draw up your Yuletide spending budget. It isn’t only the US Government that has a deficit ceiling!
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