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Do you have to make a declaration? Why people need to fill one in but often don’t realize, from dividends to pension tax relief and earning more than £100,000
- HMRC expects to complete a record number of self-assessment forms this year
- But some may not be aware that they have to do that and will accidentally miss the deadline
- HMRC may owe you money, but it is up to you to recover it
Nearly five million people still haven’t filed their tax returns — with just two weeks to go. HM Revenue & Customs says it expects record numbers to complete self-assessment forms this year.
But some may not be aware that this is necessary and will accidentally miss the January 31 deadline. The fine is an automatic fine of £100. So who has to file a return – and who can opt out?
Money Mail explains everything…
Deadline: HMRC says it expects a record number of self-assessment forms to be completed this year
Who must complete a tax return?
The top reasons you should file a 2021-22 tax return include if you:
- Earned more than £100,000 during the last tax year, even if you had a full-time job.
- Run your own business or work for yourself and earned more than £1,000 between April 6, 2021 and April 5, 2022.
- Were a ‘Partner’ in a business partnership, such as an accountancy firm.
- Earned income abroad, or lived abroad and earned income in the UK.
- Over £1,000 earned renting out property or running a holiday rental business, including Airbnb.
- Has had a job, but used your own money to travel and pay for other work expenses. You may be entitled to tax relief.
- Claimed covid-19 grants or support payments, such as the Self-Employment Income Support Scheme (SEISS).
- Need to claim tax relief, such as on retirement contributions paid from your after-tax income.
- Earned more than € 50,000 while you or your partner applied for child benefit.
- You want to claim tax relief on donations to charities (if you are a higher taxpayer).
- More than £2,000 earned from stocks or fund dividends.
- Earned income from a trust. Beneficiaries of one’s estate must pay inheritance tax on any assets exceeding the £325,000 allowance.
- You want to transfer your tax-free personal allowance to your spouse.
Reclaim tax relief
HMRC may owe you money, but it is up to you to recover it.
If you worked from home in 2021-2022, you can claim tax relief of £6 per week at your marginal rate all year – £312 in total. This is the last year that the allowance can be applied for.
If you’ve donated to charity, even by supporting a friend through Just Giving or through a recurring donation, make sure these are listed on your tax return.
And if you’re a higher taxpayer and pay pension contributions from your income after you’ve already paid tax, you may be entitled to further tax relief.
You can deduct all kinds of expenses from the tax you owe as a sole proprietor or self-employed person. This includes travel costs for work, office costs, marketing costs and personnel costs such as salaries.
As an Airbnb host, you can deduct any cleaning costs.
I didn’t know I had to report…
Millions are late filing their tax returns every year. About 2.3 million people who had to submit one for 2020-21 missed the original deadline last year.
During the pandemic, HMRC was more lenient, extending the tax filing deadline by a month in 2021 and 2022.
But this year anyone who misses the first deadline will be fined £100. After three months you will be charged additional daily fines of £10, up to a maximum of £900. If you fail to file a return for a year, you could be charged £100. get 1,600.
Tax refund: HMRC may owe you money, but it’s up to you to recover it
HMRC also charges 6 per cent interest on late payments.
But what if you don’t even realize you owe taxes or need to claim a refund? According to HMRC, that’s difficult – it’s up to you to declare your income.
Mike Warburton, former tax director at Grant Thornton, says, “As the name ‘self-assessment’ suggests, it’s up to you to assess whether you owe any more taxes.
‘The tax authorities are becoming increasingly wiser in detecting defaulters. It searches online for advertisements for rental and freelance work, which it compares to what has been declared.’
Who does not have to submit one?
Generally, you do not need to file a tax return if all your income is taxed under PAYE, you earned less than £100,000, you earn no other income that could be taxable – and you are not claiming exemptions, allowances or expenses from HMRC .
If you earn less than € 1,000 per year in additional income, you do not need to file a tax return.
If you think you no longer need to make a declaration, you should write a letter to HMRC explaining how your circumstances have changed.
Only when you get a response from the IRS that they don’t expect a tax return from you can you stop, says Mike Warburton.
If in doubt, go to gov.uk/check-if-you-need-tax-return.
l.purkess@dailymail.co.uk