Most people pay tax on their income through the PAYE scheme operated by their employer and do not need to complete a tax return. But if you fall under one or more of the categories set out below you will need to complete a tax return after every tax year. This needs to be sent to HMRC together with any tax payment that is due. This is called Self Assessment. Each tax year begins on 6 April and ends on 5 April the following year.

Who needs to complete a tax return?

  • The self employed who earn over £1,000
  • Those who earn income as company directors
  • Those who receive dividend income on which they need to pay further tax
  • Those who earn more than £1,000 from rental property
  • Those who receive income from abroad
  • Those who receive employment income over £100,000
  • Those who have sold an asset during the tax year e.g. a second home, or a rental property
  • Those who are subject to the High Income Benefit Charge

HMRC will calculate the income tax due for the following, who therefore do not need to complete a tax return:

  • New pensioners from September 2017, whose income exceed the personal allowance
  • From 2018/2019, all pensioners whose pension income exceeds the personal allowance

Notify HMRC

You must notify HMRC if you become chargeable to income tax or capital gains tax for the first time. Notify HMRC within 6 months of the tax year end i.e by 5 october 2021 if you become chargeable to income tax/capital gains tax in the year 2020/2021. There are penalties for not notifying HMRC and for late notification.

If you are unsure whether you need to complete a tax return, please contact us for advice.

Register for Self Assessment

If you need to complete a tax return, you will need to be registered with HMRC for self assessment. You will then receive a Unique Taxpayer Reference and must submit online by 31st January. For example for the tax year 6 April 2020 to 5 April 2021, online return must be submitted by 31 January 2022.

Penalties for late tax returns

HMRC have introduced new penalties. If you miss the 31st January deadline by a day, you will receive an automatic £100 fixed penalty, even if you have no tax to pay or have paid the tax you owe. If you are over three months late, you will also start to incur penalties of £10 for each additional day that you are overdue up to a maximum of £900.

If you are six months late, you also incur an additional minimum £300 penalty. bringing the total penalties to £1,300.

Clayton Accountants can deal with HMRC on your behalf. We can ensure you are registered correctly with HMRC and get your returns submitted on time, with no penalties to pay.