Eleven compelling motivations for signing up for self-assessment prior to 5th October
The UK's Her Majesty's Revenue and Customs (HMRC) requires self-assessment tax returns from individuals beyond those employed or property landlords. Here's a breakdown of who might need to file a self-assessment tax return and why.
Business Partners and Trustees
If you're a partner in a business or a trustee of an estate, you're required to report partnership income and manage your tax affairs through self-assessment.
Income Outside PAYE
Additional income outside Pay As You Earn (PAYE), such as savings interest, dividends, commissions, or investment income that exceeds certain thresholds, necessitates self-assessment.
Property Sales and Overseas Income
Selling property that is not your primary residence may result in capital gains tax, which requires self-assessment. Additionally, income from overseas, including foreign property, pension, or investments, also falls under this category.
Tax Reliefs and Allowances
Claiming tax reliefs or allowances on pension contributions, expenses, or losses requires declaration to HMRC to obtain refunds or reduce tax liability.
Tip Income and Hobbies
Receiving income from tips or gratuities, casual earnings, or income from hobbies that exceed HMRC limits also necessitates self-assessment.
Complex Tax Affairs
HMRC may ask you to complete a return even if you don’t fall under typical categories, especially if you have complicated tax affairs or unusual income sources.
Registration and Deadlines
HMRC requires registration for self-assessment from those who have any income that they have not already paid UK tax on. The deadline to file a tax return online and pay any tax owed is 31 January 2025. Anyone who needs to register for self-assessment for the 2023-24 tax year must do so by 5 October 2024.
Capital Gains and Pension Payments
If you make more than £6,000 in capital gains, you need to complete a tax return and pay capital gains tax. Higher-rate taxpayers who pay into a pension may need to file a tax return to claim additional tax relief.
Penalties and Scams
It's important to inform HMRC if your circumstances change, as failure to do so may result in penalties. Be aware of scams, and never share your HMRC log-in details with anyone, including a tax agent.
Self-Employment and Charitable Donations
Self-assessment is necessary for those who work for themselves or are in a business partnership. Higher-rate taxpayers who give to charity may need to file a tax return to claim back the rest of the tax relief.
Renting a Room and Payments on Account
If you rent out a spare room and make more than the rent-a-room limit, you need to register for self-assessment. Taxpayers who make payments on account make a second payment by 31 July every year.
Recent Changes
The £50,000 threshold for child benefit rose to £60,000 in April this year, and the top of the taper rose from £60,000 to £80,000.
For more information on scams, visit the HMRC's dedicated page.
- If you have personal-finance sources such as dividends, savings interest, or commissions that exceed certain thresholds, you are required to manage your tax affairs through self-assessment.
- Property sales, foreign property, pension income, or investments from overseas also necessitate self-assessment as they may incur capital gains tax or fall under self-assessment for income tax purposes.
- Claiming tax reliefs or allowances on pension contributions, charitable donations, or expenses might be necessary for some individuals in order to obtain refunds or reduce tax liability and must be declared to HMRC.
