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Do you need to complete a self-assessment tax return?

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As the deadline for filing self-assessment tax returns online nears, it is crucial to ensure that you understand whether or not it is necessary to actually complete the form. The deadline to submit details online and to pay any tax owing is midnight on 31 January 2020, after which anyone who is eligible for filing self-assessment tax who has not done so and settled what they owe could face a fine. The good news is that completing the form online is normally extremely straightforward, especially if you use dedicated accounting software to record your income and expenditure during the year.

Not everyone is required to file a self-assessment tax return. If you are employed, as opposed to self-employed, for example, you are not obliged to complete the forms if you have already paid tax on your earnings through the PAYE scheme, unless you earned more than £100,000 during the most recent tax year, which this year runs from 6 April 2018 to 5 April 2019.

Self-employment

However, you are required to file a self-assessment tax return if you worked for yourself during that time period, earning over £1,000 as a sole trader, business partner or director of a limited company. This applies even if you also worked elsewhere on an employed basis – you must still declare all income over £1,000 that you received from your self-employed activities.

Untaxed income

Additionally, any untaxed income such as tips or sales commissions must also be declared and laid out in full on the form. You may also need to file a tax return if you receive a P800 form from HMRC saying that you did not pay enough tax in the previous tax year. Any outstanding amount will then be claimed after your tax return has been analysed.

Other taxable income

Other areas that must be included in a self-assessment tax return include income from renting out property that exceeds £2,500, as well as income from savings or investments that total £10,000 or more before tax. If you live abroad, but have an income in the UK, this will need to be added, as well as any income from abroad that you may have while living in the UK. If your taxable income was over £100,000 you will also need to comply. Capital Gains Tax will also be relevant to any sales of assets such as shares or a second home.

Pensions and benefits

Trustees of a registered pension scheme trust will need to complete the form too, as will anyone receiving a State Pension in excess of their personal tax allowance. If you want to make voluntary Class 2 National Insurance Contributions to enable you

to qualify for State Pension benefits later on, you can use the self-assessment tax return process to set this in motion. Finally, you may need to declare Child Benefit payments if you or your partner are earning more than £50,000.

Find out more

For further information and updates regarding self-assessment tax arrangements in the UK, visit the Government’s website at http://www.gov.uk. The above information may not be fully exhaustive, and can be subject to change. Please check online for any and all updaters to ensure that you are able to comply with your self-assessment tax obligations.

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