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Do I need to complete a self-assessment tax return?

What is self-assessment tax return?

If you are self-employed, you must file an annual tax return on which you must disclose your income and capital gains and claim any applicable exemptions and reliefs. A Self-Assessment tax return may be intimidating. However, if you're prepared, organised, and aware of what you need to do and what questions you need to answer; they're much easier than they appear. It is important that you have a clear understanding of your return so that you can file it correctly and without any penalties.

In this article we look at whether you need to register and file for self assessment tax return.

What is self-assessment?

In a recent data published by HMRC around 47 million people have taxable income in the UK, out of which 31 million pay income tax as rest of the 16 million have income below the personal allowance threshold. Majority of these people pay their income tax through PAYE and are not required to submit a tax return. This is because the employer deducts the taxes from wages payment. Therefore, you will only be required to submit a self assessment tax return, if any of the following applies to you:

  • You are self-employed working as a sole trader or partnership with income of more than £1,000.
  • You receive rental income from a property of greater than £2,500.
  • You are a non-resident landlord.
  • You receive untaxed income greater than £2,500, for example from tips or commission.
  • You have untaxed income that cannot be collected via your PAYE coding notice in a later year.
  • You are an employee who wishes to claim expenses of more than £2,500, not reimbursed by your employer.
  • Your income from interest or investments is £10,000 or above before tax and expenses.
  • You need to settle Capital Gains Tax (CGT) on profits from selling things like shares or giving away personal assets of more than £6,000 or a CGT on sale of property.
  • You’re a director of a company with income that is not taxed under PAYE.
  • You or your partner’s pay was over £50,000 and you’re getting Child Benefit.
  • You have income from abroad you need to pay tax on, or you live abroad but have an income in the UK. The rules are slightly complex if you are non-domiciled in the UK and earn foreign income. Please click here for more details.
  • Your Employment income is above £100,000.
  • If you earned over £50,001 in the 2020/21 tax year (£50,001 for 2021/22) and make pension contributions, you may have to file a Self-Assessment to claim back the extra tax relief you’re owed.
  • You are a trustee of a trust or registered pension scheme.
  • Your State Pension was above your personal allowance and it was your solitary source of income.

Every year HMRC will send a notice to file tax return – to everyone in their self-assessment system in april/may month . If you receive a tax return, or a notice to file on-line, you ought to finish a return and submit it to HMRC. This maybe the case even if you're an employee and all your income are taxed under PAYE.

Also See: Self Assessment Tax Returns Service

Requesting HMRC to pull back a tax return

If you get the notice to file the tax return and you do not qualify above criteria explained and you do not owe any tax liability, you can call HMRC on 0300 200 3310 and request for the tax return to be withdrawn. If HMRC agrees with your reasoning, then they will tell you in writing that you don’t need to file a return.

The request for pulling back the return has to made within two years from the end of the tax year for which the return is due. In exceptional circumstances, where you have been a low income earner and require the tax returns to be pulled back for a few years, please speak to our experts.

The request for the returns to be pulled back can be made even after late filing penalties have been incurred. If HMRC agrees, you will not need to submit the tax return and any penalties incurred for missing the tax return filing deadline can be waived off. HMRC will not pull back a return if you have been self-employed at any time during the tax year – regardless of whether it was only for a short period and there is no tax owed.

Key dates and deadlines

Self-assessment deadlines

S.no Deadlines 2020/21
1 Registration for self-assessment By 5 October 2021
2 Submission of paper tax return By 31 October 2021
3 Submission of online tax return By 31 January 2022
4 Tax payment By 31 January 2022

Payment dates

Self assessment 2020/21
1st payment on account 31 January 2022
2nd Payment on account 31 July 2022
Balancing payment 31 January 2023
Capital gains tax 31 January 2023

From 6 April 2020, if you are selling a UK residential property, the capital gains tax returns need to be reported to HMRC and the tax paid within 30 days (60 days w.e.f 27 October 2021) of selling the property.

Late interest payment and penalties

Time delayed Penalty
30 days 5% of tax unpaid at the date
Six months Another 5% of tax unpaid
Twelve months Another 5% of tax unpaid

If you are confused whether you need to file a self-assessment tax return or not and need specialist advice on “self-assessment tax return”, kindly call dns accountants on 03330 886 686, or you can also e-mail us at info@dnsaccountants.co.uk.

Also See: How to apply Self Assessment Tax Returns online?

Also See: Online HMRC Self Assessment Tax Return Forms

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Any questions? Schedule a call with one of our experts.

About the author
Blog Author

Siddharth Agarwal
I am currently pursuing to become a chartered tax advisor and joined DNS in 2014. With more than 7 years of experience in advising owner managed businesses, I deal with a wide spectrum of tax issues, both for company and personal tax. My expertise cover owner managed business taxation issues, company re-organisations, property taxation and succession planning.

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