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Business Surgery: Chris Harman, of Bury St Edmunds accountants Jacobs Allen, explains why you might need to submit a Tax Return

A Self-Assessment Tax Return (Tax Return) needs to be submitted to HM Revenue & Customs (HMRC) to calculate your personal tax liability except in simplest cases, mainly where all your income is from employment. The Tax Return covers a tax year which starts on 6th April and ends on 5th April.

Many of us don’t need to prepare a Tax Return but there are also many of us who do. Which ‘camp’ are you in?

If HMRC hasn’t asked you to send in a Tax Return, that doesn’t mean you are not required to submit one. If you have taxable income on which tax has not been paid, or, not enough tax has been paid at source then the onus is on you, the taxpayer, to tell HMRC and to send in a completed Tax Return.

Chris Harman, client manager at Jacobs Allen
Chris Harman, client manager at Jacobs Allen

The HMRC website provides much detail on Tax Returns. The most common reasons for needing to send in a Tax Return are if, during a tax year, you have rental income of over £2,500 (although you need to tell HMRC if the rental was between £1,000 and £2,500), your total taxable income exceeds £100,000 (£125,000 for 2023/24 onwards), your income exceeds £50,000 and you or your wife / partner receives Child Benefit, you receive more than £10,000 from savings and investments, you have sold an asset on which a capital gain arises.

There are occasions where too much tax has been paid, such as a PAYE code doesn’t give sufficient allowances and reliefs such as personal pension premiums being paid, you made donations to qualifying charities (higher rate tax relief being available on both of those types of payments). To prepare a Tax Return to claim that relief should be quite satisfying! (It is always worth checking your PAYE tax code during a tax year and if it is wrong, tell HMRC).

You may be entitled to claim certain qualifying expenses against your employment such as professional subscriptions, protective clothing, travel and overnight expenses, working from home, equipment needed for your employment, work travel in your private vehicle where your employer pays you a mileage rate less than 45 pence per mile for the first 10,000 business miles in a tax year and 25 ppm thereafter. The rules for employment expenses are quite restrictive but you may be able to make a claim for the tax relief due by using either a paper form P87 or, if you have a Government Gateway set up, an online form rather than a Tax Return.

It is worth checking to see if you have paid all the taxes you should have paid or if HMRC owes you money.

There are also strict time limits by when a Tax Return has to be sent to HMRC, by when tax must be paid, by when a claim for tax relief must be made.

Professional advice from a suitably qualified professional is recommended.

-- Chris Harman, Client Manager, Jacobs Allen Chartered Accountants