Anybody that does not pay tax through a PAYE scheme as the employee of a company or small business and does not have any other income is liable for tax in the UK and required to submit a Self Assessment Tax Return to HM Revenue and Customs (HMRC). Failure to do so will result in a fine of at least £100.
Who is Liable for Tax in the Uk?
HMRC is clamping down on business owners and contractors who do not pay tax directly from their salary or submit their Self Assessment tax returns late. The penalties are harsh. If you are unsure whether you should be filing a self assessment tax return form it is better to do your research or speak with a firm of qualifies chartered accountant. The people who are liable are as follows:
- self employed
- company director
- minister of religion
- income from letting property or land
- you receive other untaxed income or significant capital gains that is not taxed through PAYE
- members of Lloyd’s of London insurance and reinsurance market
- you received income from a trust, settlement, or inheritance
- taxable foreign income
- Aged 65 or above and receive more than £25,400
Self-employed tax returns
Self employment is classed as directors of a corporation, small business owners, partnerships, freelancers and contractors. Likewise if you are a member of Lloyd´s insurance group or a religious minister of any faith in operation in the UK, you are required to complete and submit a self-assessment tax return in paper format by 31st October or online by 31st January.
Income tax from savings, investments or property
If you receive an income over a certain amount from savings, investments or property you may be required to submit a tax return form. The qualifying criteria is:
- £10,000 or more income from savings and investments
- £2,500 or more income from untaxed savings and investments
- £10,000 or more income from property before deducting allowable expenses
- £2,500 or more income from property after deducting allowable expenses
- annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
- income from the estate of a deceased person if tax has not been paid
Your annual income is £100,000 or more
If you receive a total annual income of £100,000 or more you also need to submit a tax return – even if you pay tax through a PAYE scheme. This reason for this is because high earners have an additional tax rate to pay that is not automatically collected through your tax code. The same is true if you receive income from overseas sources that is not subject to UK tax.
You’re 65 and receive a reduced age-related allowance
Anybody aged 65 or more, but receive an income over £25,400 you need to fill in a self assessment tax return form. Earnings up to the £25,400 threshold is tax free, but every pound after that is subject to a 50p tax liability and must be declared in a self assessment tax return.
As a general rule, if you fall into any of the above categories file a tax return before the October or January deadlines. If you have any doubts, your best option is to contact a firm of accountants like Taxaccolega that specialize in tax returns otherwise you are likely to be investigated by HMRC which will result in non-payment fine of £100 or double the amount of tax payable. Tax payers that HMRC deem to be deliberately evading tax liabilities are likely to have criminal proceedings brought against you. To avoid complications with HMRC contact Taxaccolega now on 08000 235 234 or email email@example.com.