There are two distinct legal requirements which may apply:
- In some cases, you may need to notify HMRC that you owe tax for a year.
- If HMRC ask you to file a tax return, then you must do so unless HMRC cancel the requirement.
You can check if you need to do a tax return using the tool on the .gov website. If you need to do a tax return you must register by 5 October following the end of the tax year. If you do not do this you could be charged a penalty for failure to notify.
When you notify HMRC that you owe tax for a year, they may ask you to complete a tax return for that year so you can report and pay that tax via self assessment.
You must send a tax return if, in the last tax year (6 April to 5 April), any of the following applied:
- you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)
- you were a partner in a business partnership
- you had a total taxable income of more than £150,000
- you had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value
- you had to pay the High Income Child Benefit Charge
You may also need to send a tax return if you have any untaxed income, such as:
- money from renting out a property
- tips and commission
- income from savings, investments and dividends
- foreign income
Remember, if HMRC have asked you to file a tax return, you will be charged penalties if you do not submit one by the deadline (even if the tool suggests that you do not need to file a tax return). Please don’t bury your head in the sand and hope it will go away as it will not. In this situation, you can ask HMRC to cancel the notice to file.
If you would like Premier Tax Solutions to help with your tax return book a discovery call with us to begin the process of joining us as a client.
