Some people believe that you only need to send an income tax return if you’re self-employed. This isn’t always the case, which is why Prestige Tax and Trust Services asks: do I need to do a tax return if I am employed?
You’re legally required to pay ‘income tax’ on most forms of income. The majority of people’s income tax is deducted automatically from their wages through the PAYE system. But if you’re self-employed you’re required to submit a Self-Assessment Tax Return to HM Revenue and Customs (HMRC). The return applies to the previous tax year – you must fill it in after that tax year has ended (5th April in 2015); you can do so via paper forms or the government’s online service. You must register, submit the return, and pay income tax by the official deadline.
Who must send?
But the self-employed aren’t the only people who are required to send a Self-Assessment to HMRC. You’re also obligated to do so if you receive extra income in addition to your salary. This means that you’ll need to do a tax return if in the last year:
- Your income exceeded £100,000.
- You earned £2,500 or more in untaxed income, e.g. from renting out a residential property to tenants. If this income was less than £2,500 contact the government’s income tax helpline to determine which course of action you need to take.
- You were a trustee of either a registered pension scheme or a trust.
- You received income from a foreign country that you needed to pay tax on.
- You lived in a foreign nation, but still had a UK-based income.
- You received dividends from shares, and you’re a higher/additional rate taxpayer. If you don’t need to send a tax return for any other reason, contact the above mentioned helpline.
- You or your partner’s income exceeded £50,000, and one of you received child benefit.
- Your investment income or savings was £10,000 or more before tax.
- You earned profits from selling chargeable assets such as a second home or share that you’re required to pay capital gains tax
- You were a company director – unless it was for a non-profit organisation, such as a charity, and you didn’t get any pay or benefits e.g. a company car.
If HMRC send you a letter/email telling you that you must submit a Self-Assessment Tax Return you must do so, even if you don’t have tax to pay. We should also point out that certain other people e.g. religious ministers, may need to send a return – click here to see whether this applies to.
Prestige Tax and Trust Services
You’ll notice that trustees of a trust are required to submit a Self-Assessment Tax Return. In general we’d also advise you to utilise legal expertise before you establish a trust – something Prestige Tax and Trust Services can help you with. Our trust team has the knowledge, skill set and experience you need to set up a trust within the parameters of the law.