Tag Archives: personal tax

When do you need to submit a self-assessment?

Despite ongoing consultations and efforts to simplify the system, many taxpayers are still left unsure of what it is they’re meant to do.

Since filing a self-assessment late carries a hefty penalty fee, knowing when you’re required to complete a tax return is very important.

The chances are that, if you completed a self-assessment for the last tax year, you’ll need to do it again this year. HMRC tend to issue letters informing people when completing Self Assessment forms are no longer necessary, and they actively urge taxpayers to tell them as soon as their situation changes.

A spokesperson for HM Revenue and Customs stated “people with slightly more complex affairs may have to fill in a tax return but it all depends on their personal circumstances.

“We don’t want anyone to fill in a tax return unless it’s absolutely necessary.”

So, how do you know if it is necessary for you? HMRC will judge whether or not they need you to complete a Self Assessment based on a few different factors. Here are some of the more important points to consider –

Your income

As a rule, anyone with a taxable income of more that £100,000 will automatically be required to fill out a self-assessment form.

If you make any income over £10,000 from savings, investments or shares, you’ll also need to report it to HMRC.

Say you sold your holiday home or some shares to your business in the last year. You would need to disclose that income on a self-assessment in order to pay the Capital Gains Tax that you owe.

In most cases, though, if your only income comes from your wages as a non-shareholding employee/director or pension, you won’t need to submit a return.

Your role

If you’re self-employed, or were self-employed at any point over the past tax year, you will need to submit a Self Assessment. You will be allowed to deduct some allowable business expenses from your income before working out how much you owe in tax.

Company directors also need to complete a Self Assessment unless they work for a non-profit organisation and do not receive any pay or benefits. Trust and registered pension scheme trustees must complete tax returns.

As a landlord, you may not think of yourself as self-employed or as a business owner. But, in HMRC’s eyes, you are. You must report all income you receive in rent but you will be able to deduct revenue expenditure from your profits to reduce your tax liability.

Depending on your individual circumstances, you may need to send a return even if you do not fall into any of these categories. For example, religious ministers and Lloyd’s underwriters are also liable for self-assessment.

Other types of income

Even if your usual income does not meet the HMRC criteria for requiring a Self Assessment, other factors may mean you still need to fill out a tax return.

This could include your partner’s income too. If one of you makes more than £50,000 a year, and either you or your partner are claiming child benefit at the same time, you will need to report it on a self-assessment form.

Income from overseas is also taken into consideration. Any tax owed on income in other countries must be put on your tax return. Even if you were living abroad yourself, you’ll need to pay the tax on any UK income you made during that time.

If you have received a P800 from HMRC saying you didn’t pay enough in the last tax year, and you have not already payed what you owe through your tax code or voluntary payment, it will be added onto your total tax bill.

Work with us

In any case, if you receive a letter or HMRC telling you to send in a tax return, you must submit the form. Even if you don’t have any tax to pay, going against HMRC could result in fines or even trigger an official investigation.

The Self Assessment process can seem daunting, especially with new tax changes being announced every year. If you need any advice or guidance through submitting your tax return, speak to us today on 01872 271655, or email us on enquiries@kelsallsteele.co.uk

Making Tax Digital: New Timetable

HMRC have announced significant changes to the timetable for the implementation of Making Tax Digital. We have previously written about HMRC‘s original plans for the implementation of Making Tax Digital, which would have come into effect from April 2018 for a number of businesses and landlords with gross income exceeding the VAT threshold (currently £85,000), and April 2019 for those below the threshold – however these timescales have now been relaxed.

Following HMRC’s newly reformed timetable, only VAT Registered businesses will be required to keep digital records from April 2019 – and only for VAT reporting purposes. The previous requirements for the reporting of other taxes quarterly to HMRC will not come into effect until at least 2020. This means businesses and landlords with turnovers below the VAT threshold will have at least 2 years before having to adopt a new digital system.

While the Government and HMRC are wholly supportive of MTD and the need to move to a more modern and streamlined system for the reporting of businesses tax affairs this is a significant slackening in the more imminent timescales that were previously expected. These changes have been well received by businesses and software providers alike who both recognise that more time is required to be able to make a comfortable transition to a new digital system of working.

 

 

Paying HMRC

A question we get asked quite regularly is “How do I pay HMRC?”, below is a summary of the key ways of paying HMRC for Corporation Tax, VAT and Personal Tax:

Corporation Tax

If your taxable profits are less than £1.5m HMRC will expect you to pay the Corporation Tax in one go, the deadline for this is 9 months and 1 day after the end of your accounting period. If the payment is late then HMRC will charge you interest based on the amount of Corporation Tax owed.

  • At the Post Office – For payments up to £10,000 you can pay at the Post Office by debit card, cash or cheque made payable to ‘Post Office Ltd’. You will need a payslip which HMRC will send to you after we have electronically submitted your Company Tax Return.
  • Online or telephone banking – There are two bank accounts you can use to pay your Corporation Tax to HMRC, the payslip which HMRC send you will detail which account to use, but if in doubt use Cumbernauld. As the reference, use your 17 character Corporation Tax reference which can be found from the payslip HMRC will send you.
Account Name Sort Code Account Number
HMRC Cumbernauld 083210 12001039
HMRC Shipley 083210 12001020
  • Online by Debit or Credit Card – You can pay directly to HMRC online using the following link. You will need your 17 character reference number which can be obtained from the payslip HMRC will send you. It is worth noting that HMRC will charge you 1.4% of the payment value if you pay by Credit card.

If your taxable profits exceed £1.5m HMRC will expect quarterly payments.

Value Added Tax – VAT

The deadline for paying your VAT is normally the same as the filing deadline, being 1 month and 7 days after the end of the VAT period. There are several ways to pay your VAT:

  • Direct Debit – The easiest way to pay your VAT is to set up a Direct Debit, once you have submitted a VAT return HMRC will automatically set up to take the payment owed, or if you are due a repayment this will be made directly into your bank.
  • Online or telephone banking – You can make your VAT payment using online banking or telephone banking using the account details just below. The reference you will need to include will be your 9 digit VAT registration number which can be found on your VAT registration certificate.
Account Name Sort Code Account Number
HMRC VAT 083200 11963155
  • Bank or Building society – You can pay at your local bank or building society, however you will need order paying-in slips from HMRC, these can take up to 6 weeks to arrive. Payment can be made using cash or a cheque made payable to ‘HM Revenue & Customs only’ followed by your 9 digit VAT registration number.

Personal Tax

Payments for personal tax are generally required to be made to HMRC twice a year. On 31 January you are required to pay the prior year’s tax (Balancing payment), and also the first payment on account for the year ahead. On 31 July you need to make your second payment on account.

  • At the Post Office – For payments up to £10,000 you can pay at the Post Office by debit card, cash or cheque made payable to ‘Post Office Ltd’. However, you will need to still be getting paper statements from HMRC and also have the paying-in slip which HMRC sent you.
  • Online or telephone banking – There are two bank accounts you can use to pay your personal tax to HMRC, your bill should tell you which account to use, but if in doubt use Cumbernauld. As the reference use your 11 character Unique Taxpayer Reference (UTR) followed by the letter “K” which can be found on your tax return or your HMRC online account.
Account Name Sort Code Account Number
HMRC Cumbernauld 083210 12001039
HMRC Shipley 083210 12001020
  • Online by Debit or Credit Card – You can pay using your credit or debit card using the following links. You will need your 11 character Unique Taxpayer Reference (UTR) followed by the letter “K” which can be found on your tax return or your HMRC online account.

Pay HMRC online via Debit Card

Pay HMRC online via Credit Card  – (Incurs 1.4% fee)

  • Post a cheque – You can post a cheque to HMRC, the cheque will need to be made payable to ‘HM Revenue & Customs only’ followed by your Unique Taxpayer Reference (UTR). You will need to send the cheque with a payslip, if you did not receive a payslip from HMRC you can create your own payslip online.

The cheque and payslip should not be folded or fastened together, they should then be sent to the following address:

HM Revenue & Customs
Bradford
DB98 1YY