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Many people pay their tax through the payroll system. That means their employer works out and deducts their tax and national insurance from their pay, as well as paying it over to HMRC.
Some people may have received income in an alternative/additional way to the payroll system.
That means they have received income that is untaxed and need to let HMRC know about it as well as paying over tax on it.
Who Needs to Submit a Self-Assessment Tax Return
Here are some of the scenarios which may mean you need to submit a personal tax return:
- You earn money working for yourself, whether as a part-time job or you work from home where you are paid weekly/monthly but do not receive a payslip.
- You work full time for yourself and are self-employed;
- You own additional properties, not just the one you live in, and receive rental income from tenants renting from you;
- You are employed, receive a payslip, but earned a gross salary of more than £100,000;
- You are or were the Director of a Limited Company during the tax year or a Partner in a business whether you own shares or not;
- You received interest that was untaxed or not taxed at source. Generally, the interest you receive on savings in a bank or building society is given to you after tax but there are circumstances where you receive interest gross, like if you have a National Savings and Investment account. This doesn’t include savings in an ISA or Premium Bonds, these are tax-free and don’t need to be shown on your tax return.
- You received dividends from shares you own. This can include a dividend on shares you bought in a listed company as an investment or dividends you paid yourself through your Limited Company;
- You or your partner have a gross income of over £50,000 and claim child benefit;
- Your savings or investment income was £10,000 or more before tax;
- You need to let HMRC know about a Capital Gain. For example, you sold a second property and made a profit or a loss, which you need to report to HMRC;
- You completed one in the previous year. If you completed a return previously, HMRC will assume you need to complete another.
Who Does Not Need to Submit a Self-Assessment Tax Return
There are certain circumstances that mean someone does not need to submit a self-assessment tax return:
- All your income is earned under PAYE;
- Your tax has been deducted at source;
- Received income of less than £1,000 like from eBay or babysitting, which falls under the rules of the Trading and Property Allowance;
- You earn interest of up to £1,000 for basic rate taxpayers or £500 for higher rate taxpayers on your savings (Personal savings allowance);
- You have a hobby.
If your circumstances have changed from the previous year and you feel you should not submit a personal tax return, contact HMRC on 0300 200 3310 and ask if they can withdraw the return.
As long as they agree, they should remove the requirement and cancel any penalties which may have been charged.
Updated 21 April 2019
Anita is a Chartered Accountant with over a decade of experience taking self employed business owners from financially confused to business savvy.
She is the creator of the ‘Go Self Employed’ website, which her corner on the internet where she makes self employment less terrifying.