Who needs to complete a tax return?
Most people pay their tax as they go along by having it deducted from their wages by their employers. If however you are not employed but still have income that is taxable you will need to register with HMRC and complete a self assessment tax return each year.
Self employment income
If you work for yourself you will need to inform HMRC of any income and related expenses. If you’re income is under 30,000 then it’s more straightforward. You will also be able to claim tax reliefs such as capital allowances on plant, machinery and vehicles used in your business. Learn more about completing your self employment tax return.
Income from Land & Property
If you let out property then you will need to keep records of the amount of rent received and the associated expenses. You will have to pay tax on any profit you make. There are different types of income from land and property and you need to fill in the correct pages that relate to your circumstances. Learn more about completing your property tax return.
Company director
It's usual for directors of limited companies to be asked by HMRC to complete a tax return each year. You will need to include in the return all sources of income not just those from the company you are a director of.
Taxable foreign income
If you have income that arises from another country then this still forms part of your UK assessable income and as a result you will need to include this on your self assessment tax return. Examples of this are interest from a foreign bank account or dividends received from shares in a foreign company. If you have paid tax on this income then you will be given credit by HMRC if there is a double taxation treaty in place with the country in question.
Sale of assets resulting in a capital gain
The sale of certain assets could trigger a capital gain which could lead to you paying capital gains tax (CGT) to HM Revenue. It’s quite a complex area of tax so it’s always best to get specialist advice from the outset. Not all assets are liable to CGT, for example any gains made on your main home or cars are exempt from tax.
Employees with annual salary over £100,00
If you are a high earner and your gross salary is over £100,000 then HMRC will request you to complete a self assessment tax return. You need to include all your income from all sources including any interest from banks and building societies.
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Self assessment was introduced in 1998 as the way taxpayers would inform HM Revenue of the income they have received during a tax year. The phrase self assessment relates to the fact that it is now the taxpayers responsibility to inform HMRC about their tax affairs during the year concerned.
Read the rest of Self assessment explained
When you are dealt with under self-assessment it's important to keep in mind the key dates throughout the tax year. You have a legal obligation to submit documents and figures to HMRC in a timely fashion, if you don’t they could add penalties and surcharges.
Read the rest of tax returns - key dates