This is a commonly asked question – and people often do not realise that they have to register for self-assessment and file a personal tax return .
If you fell into any one of the categories below between 6 April 2016 and 5 April 2017, then yes you do need to file a personal tax return:
- You were self employed
- You were a company director – SEE BELOW
- HMRC have sent you notification to complete a return
- You had more than £2500 in untaxed income, eg from renting out a property
- You received dividends, savings or investment income before tax of more than £10,000
- You have a Capital Gain – ie you made profit from selling shares, a second home, a business or other chargeable assets
- You or your partner’s income was over £50,000 and one of you claimed Child Benefit in the year
- You had income from abroad that you need to pay tax on
- You lived abroad and had a UK income
- Your income was over £100,000
- You had a form P800 send from HMRC saying you didn’t pay enough tax last year and you haven’t either sent them a cheque or arranged to pay it via your tax code
The company director question is an interesting one and one that has been subject of an HMRC tribunal in the year.
HMRC’s guidance on their website will tell you that all company directors need to complete a tax return – but that is to put it kindly, misleading (as the tribunal concluded!)
If you are going to have a tax liability based on your income, then yes, you need to notify HMRC and complete a return – but if you have no further tax liability, then there is no requirement to register for self-assessment, director or not!
Unfortunately due to the change in dividends rules in 16/17, many directors will be having to file a tax return this year for the first time, as personal tax payments become due on dividends over £5,000.
If you do fall into one of the categories above, and have not filed self-assessment returns before, you have to notify HMRC by 5 October 2017 that you have a tax liability for the year. You then have until 31 January 2018 to file your return online.
We act for many small businesses completing tax returns for the first time – and we get that its daunting! We can help you through the process and make it as stress free as possible– do get in touch for more information.