Date posted: 13th Apr 2023
The new tax year is here and HM Revenue & Customs are issuing individuals with notices to complete a Tax Return (some people may be notified online) for the year to 5 April 2023. So we answer a commonly asked question of “Do I need to complete a Tax Return?”
The deadline
The deadline for completing your 2022/23 Tax Return (online) is 31 January 2024. However, that does not mean that you cannot complete the Tax Return sooner as this does not impact when the tax is payable. In fact, it is usually better to be notified of any tax liabilities as far in advance as possible.
Do you need to complete a Tax Return?
If you are unsure whether you need to complete a Tax Return, we have some guidance below that may help you establish your position.
In basic terms, you need to complete a Tax Return if you have a tax liability that cannot be collected by HMRC via a direct deduction of tax at source. So most individuals with salary or wages as their only source of income don’t complete Tax Returns as the correct tax should have been deducted from their income by their employer.
Those with untaxed sources of income may need to complete a Tax Return to report the tax due to HMRC. Examples of untaxed income are:
- Income from self-employment including CIS subcontractors.
- Share of partnership profits.
- Rental income (even if you make a loss!)
- Bank interest.
- Dividend income in excess of £2,000.
In addition, if you receive child benefit and have income of over £50,000 you are likely to meet the requirements to complete a Tax Return.
In addition, an individual with total income of over £100,000 can prompt HMRC to request that they complete a Tax Return, due to the tapering of the personal allowance that occurs once the £100,000 threshold is breached.
If you have sold a capital asset (e.g. a property or share portfolio) then you may need to complete a Tax Return to report any capital gains tax payable. Similarly, any capital losses should also be reported to ensure that these can be used in the future. If in the current tax year, you have sold a residential property, the disposal may need to be reported to HMRC within 60 days of the sale (see https://www.cliveowen.com/2020/12/property-sales-reminder/) as well as ultimately on your 2023/24 Tax Return.
You may also be required to complete a Tax Return if you have income over £200,000 and your or your employer make significant pension contributions.
There are penalties for not notifying HMRC of any liabilities as well as penalties for late filed Tax Returns. If you are unsure whether you need to complete a Tax Return, please call us.
What about company directors?
Despite what HMRC guidance may state there is no legal requirement for a company director to complete a Tax Return. We have successfully argued against this in the past with HMRC and managed to cancel late filing penalties in respect of Tax Returns for directors, where they have no tax liability other than the tax taken from their salary.
However, most company directors are likely to receive dividend income and therefore have a requirement to complete a Tax Return to declare the tax due on the dividend income.
If you have received a Tax Return from HMRC and are unsure why you need to complete one, then give us a call as we will be able to advise and assist in completing the Return for you.
