By Mark Caldicott, White Hart Associates Tax Partner
Many people earning money in addition to their PAYE job have just a matter of weeks to inform the government.
Those needing to complete a self-assessment tax return for the first time to cover the 2023-24 financial year must register with HM Revenue and Customs (HMRC) by October 5th.
Among those affected could be new landlords renting out properties, anyone setting up a side hustle to earn money in addition to their regular job or someone who disposed of crypto assets.
According to government figures, 12 million people already file a self-assessment tax return and this new legal requirement is expected to affect many more who have income that they have not paid tax on.
So, who exactly needs to register for self-assessment?
The list of people who will be caught by this new ruling are as follows:
- A newly self-employed person who earned gross income over £1,000
- Anyone earning below £1,000 and wishing to pay Class 2 National Insurance Contributions voluntarily to protect their entitlement to a state pension and certain benefits
- A new partner in a business partnership
- Someone receiving any untaxed income over £2,500
- Individuals receiving child benefit payments who need to pay the High-Income Child Benefit Charge because they or their partner earned more than £50,000
It’s your responsibility to fill in a tax return
Just because HMRC hasn’t been in touch, it doesn’t mean you don’t need to fill in a tax return. It’s the individual’s responsibility to work out if they need to complete a self-assessment form.
Furthermore, even if a customer does not owe tax, they may still need to file a tax return to pay voluntary Class 2 National Insurance Contributions to protect their entitlement to certain benefits and the State Pension.
It’s not all about paying tax either. It may be necessary to fill in a form to claim a refund or relief on business expenses, charitable donations or pension contributions.
If you do owe tax, you will not have to pay it immediately. The deadline for filing a return and paying any tax is January 31, 2025. You may also be able to set up a budget payment plan to spread the cost of any bill.
If you’re unsure about your position, use the free online tool on gov.uk to check.
Tell HMRC if you’ve stopped being self-employed
It is also an individual’s responsibility to tell HMRC if they have either stopped being self-employed or they don’t need to fill in a return, particularly if they have received a notice to file. If not, HMRC will keep writing to them to remind them to file their return and may charge a penalty.
Customers may not need to complete a tax return if they have stopped renting out property, no longer need to pay the High-Income Child Benefit Charge, or their income has dropped below the £150,000 threshold for filing a self-assessment tax return.
Don’t worry about money made from selling those unwanted items
Anyone who had a clear out of their attic and sold old books, CDs, clothes and other personal items on online marketplaces, does not need to file a self-assessment form and pay tax on the sales.
Despite contrary scare stories earlier this year, the tax rules have not changed in this area.
White Hart Associates are specialist accountants for the travel industry. Visit whitehartassociates.com or contact 0208 878 8383 for more information.