Self Assessment tax return is a system used by HMRC (HM Revenue and Customs) to collect income tax. It is called “self assessment” because in terms of accounting and numbers, it is completed based on the tax payer’s own assessment. Although the tax is usually deducted automatically from salaries, pensions and savings, there are still cases where this does not apply, and this article focuses on such cases.
CASES UNDER WHICH YOU MUST SUBMIT YOUR TAX RETURN
➤ if you received money from renting out a property
➤ if you received tips and commission
➤ if you received income from savings, investments and dividends
➤ if you received foreign income ➤ if you received income from Self-employment
Generally, the reason you are required to submit your tax return in England is because HMRC cannot be aware of all income of a tax payer as to assign the appropriate tax code (based on income scale). HMRC only monitors salaries through PAYE. Another reason is to make sure the tax placed is fair.
A typical example would be tax for income from renting a property abroad, since up to a certain income limit, the tax rates in some countries are lower than in England. This means that if the HMRC is not aware of this income, the tax payer will pay less tax for their total income, which is considered tax evasion and would have legal consequences and in addition, the taxpayer treated unfairly comparing to other tax payers due to incorrect tax code.
If there has been tax withholding, this has to be mentioned in the tax return form and based on either national legislation or inter-state agreement (treaties on double taxation), there will be deductions or appropriate adjustments on amount due.
There is another typical example of confusion regarding tax return and company directors, as it is believed that if the director of a company does not reside in England, they do not have to submit a tax return. This, however, is wrong and if your circumstances are similar, it is highly recommended to contact a professional accountant and receive valid and correct information. We at UPECO can provide such consultancy service via a Skype meeting.
To check if you are required to submit a tax return, click here.
Translated / Edited: Apostolia Nestoratou
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This article intends to give only a general informative picture and should not, in any case, be taken as a rule. It is strongly recommended to seek a full and professional guidance specifically for your circumstances before making any decisions.