Although not everyone is needed to file a self-assessment tax return, there are various circumstances in which you may be compelled to do so, even if you are an employee with tax withheld from your pay.
Because HM Revenue & Customs (HMRC) might levy fines if you fail to file a tax return by the deadline, it is essential to be aware of scenarios in which a return is required. We’ve included some frequent circumstances where you’ll need to file a refund below.
If you are self-employed – or employed and may have self-employed earnings – and earned more than £1,000, or if you are a partner in a business partnership, you must always file a tax return with HMRC.
You may also be required to file a self-assessment tax return with HMRC if you have capital gains or untaxed income, such as:
rent from a property income from savings, investments, and dividends
foreign earnings
If your profits from the aforementioned sources fall below specified thresholds, you may not be required to file a return. However, the income may still be taxed. A reasonable rule of thumb is that a tax return is usually necessary unless the income is tax-free, covered by your tax allowances, or tax has been collected via your PAYE code.
Always double-check the situation, and if in doubt, HMRC has an easy-to-use online tool to determine if a return is required.
Earners with a higher income who get child benefit
If your income exceeds £50,000 and you or your spouse get Child Benefit, HMRC will compel you to file a tax return in order to pay a tax fee known as the ‘High Income Child Benefit Charge.’
Landlords who earn a rental income
Most landlords who receive rental income must file a tax return.
It is critical for landlords who have unreported rental revenue to rectify this as soon as possible. The good news is that HMRC has launched a special Let Property Campaign for landlords who have fallen behind on their tax filings.
You may typically anticipate a smaller penalty than HMRC would ordinarily assess and the best available conditions if you make a voluntary disclosure.
Landlords should also keep in mind that, as of April 6, 2020, the time for completing a return and paying Capital Gains Tax (CGT) on the sale of a UK residential property has been shortened to 30 days from the date of completion of the transaction.
CGT is a complicated tax with several reporting and payment dates, as well as possible reliefs that might result in significant savings. As a result, it is essential that you seek expert assistance.
This list is not complete, but it should give you an idea of the kind of items that may necessitate the filing of a tax return.