Friday 26 January 2018

Finance Fridays – Who needs to complete a tax return?

We were talking about Open Banking and the benefits it could bring to you in last week's Finance Fridays. This week we are talking about self assessment forms. The 31st January deadline is looming large for people who need to complete a tax return for the 2016/17 tax year. Most people don't need to complete a self-assessment as they are taxed through the PAYE system when they receive their salaries. However there are some circumstances when people do not to complete one but not realise it.

When you need to complete a tax return:

- If you are self-employed. You need get your records together about how much money you made overall and any allowable expenses you can claim.

- If you received more than £2,500 or more in untaxed income. This could be money you received letting property, 'cash in hand' jobs, surveys or tips.

- If you have savings, investments or share dividends and the income from these was £10,000 or more before tax.

- If need to pay Capital Gains Tax because you have made a profit from selling shares (unless held in an ISA or PEP), a property other than your main residence or other chargeable assets. These are normally classed as personal processions which you sell for £6,000 or more. Your main home and car is not classed as a chargeable asset but items such as jewellery, paintings, antiques, coins and stamps are.

- If you were a company director for a commercial, profit making organisation and you didn't receive anything in the way of pay or company benefits.

- If you or your partner claimed Child Benefit and either of you had an individual income of over £50,000 p.a.

- If you have lived abroad but had an UK income or you are resident in this country but received income from abroad that needs to be taxed.

- If your taxable income was £100,000. This is because your Personal Allowance goes down the higher your income is over £100,000.

- If you were a trustee of a trust or registered pension scheme.

- If you have received a P800 notice from HMRC which states you didn't pay enough tax last year and you haven't already paid through your tax code or a direct payment to HMRC.

- If you are in receipt of the State Pension before 6 April 2016 and it is your only source of income and it is more than your Personal Allowance.

If you've been requested by HMRC to complete a return you need to do so unless you believe you don't need to. In these circumstances you need to contact HMRC and explain the situation otherwise you may have to pay a penalty.

It can also be in your interest to complete a self assessment as you can claim tax relief and therefore actually receive money from HMRC.

You should complete a self assessment form:

- If you have donated to charity through either Gift Aid or Payroll Giving directly from your wages or pension.

- If you are a higher or additional rate taxpayer and you pay private pension contributions. Also if you are a basic rate taxpayer and your pension scheme isn't set up for automatic tax relief.

- If you have paid out for work expenses for over £2,500 and you haven't had them paid back by your company.

Have you completed a self assessment form? Do you think you may need to complete one now?

If you want to join in with this week's Finance Fridays then add your link to the linky below. Any post concerning financial matters is allowed. Full details here. It doesn't have to be published today as you have until 23.55 on Tuesday 30th January 2018 to join in.

Finance Fridays

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