The United Kingdom introduced a new tax system in April 2017. This included changes to the way people who are living abroad report their earnings. If you receive money from sources outside the UK, it could mean that you have to fill out a tax return. You should do this even if you don’t qualify for double taxation relief because it doesn’t matter what you pay in taxes in another country; you still owe the same amount here in the UK.
If you’re a resident in the UK, you’ll probably want to file a tax return anyway. Even if you don’t qualify under the remittance basis, there are reasons why you should still complete one. For example, you may have been able to claim expenses while overseas, or you might want to claim benefits such as Child Benefit or Working Tax Credit.
Double Taxation Relief may apply. Depending on how much foreign income exists, you may be eligible for some sort of exemption.
What is Self Assessment (SA)?
Self assessment (SA) is a tax system where you pay yourself a salary. You are required to pay yourself a certain amount each month and you must do it every single month. This is called self assessment because you are doing the assessing yourself.
If you don’t pay yourself enough money, you could face penalties. If you pay too much, you’ll owe extra taxes.
The rules about how much you’re allowed to pay yourself depend on what type of income you make.
You might think that SA isn’t worth it because you won’t save anything. But there are some ways to use SA to save money. For example, you can use SA to build up savings. Or you could use it to reduce your tax bill.
Do I need to file a tax return using the “Self Assessment” method?
Most people don’t actually need to complete a tax self assessment return unless they fall within one of the following three categories.
If you are a company director you should contact HM Revenue and Customs (HMRC)to find out whether you need to complete tax return.
If you are receiving rental income you must complete a tax return even if you are paying all taxes ‘at source’.
What are the relevant Self Assessment deadlines and dates?
The deadline for filing your tax return depends on whether you have to file it yourself or use a professional accountant. You must file your tax return by April 5th each year. However, there are some exceptions to this rule. For example, if you’re a sole trader or partnership, you won’t have to file your tax return if you haven’t been carrying on a trade or profession since January.
If you’re a corporation, you’ll have to file your tax returns every three months. This applies even if you’re making no profits. In addition, if you’re a limited company, you’ll have to report your accounts for the previous financial year on June 30th.
There are several other important dates for self assessment. These include:
• The date for paying your initial tax bill – usually due by July 31st.
• The date for submitting your tax return – usually by October 15th.
• The date that HMRC sends you a reminder letter – usually by November 7th.
• The deadline for filing appeals against HMRC decisions – usually by December 14th.
What records must I keep?
You must keep certain records for five years after filing your tax return. This includes copies of W2 forms, 1099 forms, bank statements, etc. You don’t need to keep every receipt, but it helps to know what you spent money on.
If you let property, keep those records for at least five years after the end of the tax year. You’ll want to save receipts for expenses like mortgage payments, insurance costs, repairs, and maintenance.
What should I do if I no longer have to file a tax return?
If your circumstances have changed, such as moving abroad, changing jobs, getting married or divorced, having children, starting a new job or losing income, you might no longer need to complete your tax return. You could still owe money, however. If you haven’t completed your tax return because you didn’t think you needed to, you should tell HM Revenue & Customs now. This will allow you to avoid penalties and interest charges.
You’re entitled to a full refund if you’ve paid enough tax to cover the amount of tax you owed. But if you owe less than £1,500, you’ll usually receive a smaller refund. And if you owe more than £100,000, you won’t get a refund at all. So if you owe less than this amount, you should make sure you pay the correct amount of tax.
If you’re due a refund, you should check whether you’ve received one. If you haven’t, you can ask HM Revenue & Customs about it. They’ll give you information about how much you owe and how you can claim back taxes.
If you’ve been paying too little tax, you can claim back taxes either online or by sending a paper form to HM Revenue & Customs. You can use a free online tool called eTaxReturn to calculate how much you owe. Or you can download a form from the HMRC website.
If you’ve had some losses, you can reclaim those as well. For example, if you’ve sold property, you can claim back capital gains tax. You’ll need to keep records of the sale, like invoices and receipts. These documents will show you how much you earned and lost on each transaction.
If you’ve got a mortgage, you can also claim back stamp duty. To do this, you need to provide proof that you bought the house within three months of buying the stamp duty loan.
If you’re planning to move abroad, you should tell HMRC about this change. Otherwise, you could end up owing more tax later.
But if you’re thinking of doing something else entirely, you shouldn’t worry about completing your tax return. Just remember to inform HM Revenue & Customs if your circumstances have changed.
Frequently Asked Questions
What if I have never filed a tax return before?
The deadline to file your tax return for 2018/19 is fast approaching. If you are due to submit a tax return, it’s important to know what you need to do next.
You must register for a tax refund or credit within six months of submitting your tax return, otherwise you risk incurring a penalty. In addition, you must make sure that you send off your tax return before 5 October, otherwise you could face a fine.
If you submitted a tax return for 2017/18, you still have a chance to claim a refund or credit for 2018/19. However, you must register for a tax rebate or credit by 31 January 2020.
We explain the different ways you can pay your taxes and how much interest you could owe HM Revenue & Customs (HMRC), along with the penalties you could face, in our guide to paying your taxes.
What is a short tax return?
The UK government introduced short tax returns in 2018. Short tax returns are designed to make it easier for people to complete their tax returns online. They allow taxpayers to submit information about their income and expenses over three months rather than 12 months. This makes completing the self assessment form quicker and less stressful.
Short tax returns don’t replace the standard self assessment form. If you’re eligible for either a short tax return or a standard self assessment form, you’ll still need to file a full return. However, if you want to reduce the amount of paperwork involved in filing your taxes, a short tax return could be a good option for you.
There are some restrictions on how much money you can claim using a short tax return. You can’t use a short tax return to claim back personal allowances, capital gains tax relief or inheritance tax. And you can’t claim back national insurance contributions or child benefit.
If you do decide to use a short tax return, there are four things you need to remember. Firstly, you must complete the short tax return within six weeks of submitting your self assessment form. Secondly, you can’t claim back any deductions from your self assessment unless you’ve completed a short tax return. Thirdly, you won’t receive a refund until you’ve submitted both forms. Finally, you can’t claim the same deduction twice – once for the short tax return and again for the full self assessment.