Self Assessment
Self-Assessment is a system employed by HM Revenue and Customs (HMRC) in the UK to collect income tax from individuals and businesses. It is a way for taxpayers to report their income, gains, and other financial details, enabling HMRC to calculate the correct amount of tax owed.
With the personal allowance frozen until 2027-28, it is important to understand how this affects you and whether you now fall into Self-Assessment. The personal allowance is the amount of income you can earn before you start paying income tax. This freeze means that as your income rises with inflation, you might find yourself exceeding the personal allowance threshold and therefore having an income tax liability.
Who Needs to Complete a Self-Assessment Tax Return?
- Self-Employed Individuals: If you run a business as a sole trader, you must complete a Self-Assessment tax return if you have earned over £1,000; this includes freelancers, contractors, and small business owners.
- Partners: If you are, or were, a partner in a business partnership in the previous tax year, you must complete a Self-Assessment tax return.
- Landlords: If you receive more than £1,000 of rental income from a property you own, you must notify HMRC, however this can be done by contacting HMRC directly, rather than via Self-Assessment. If the income received is greater than £2,500, this must be reported on your Self-Assessment tax return.
- High Earners: If your total annual taxable income is over £100,000, you must complete a Self-Assessment tax return, regardless of your source of income (note this threshold increases to £150,000 for 2024/25 but you may still need to file a return due to other reasons).
- Savers: If your income from savings and investments (e.g., dividend income) exceeds £10,000, you must report this to HMRC on your Self-Assessment tax return. Please note, however, that savings/dividend income less than £10,000 may generate a tax liability which will need to be reported to HMRC, however this can be done informally by speaking to HMRC, rather than by completing a Self-Assessment return.
- High-Income Child Benefit Charge Payers: If the High-Income Child Benefit Charge applies to you, then you must complete a Self-Assessment tax return.
- Those with Complex Finances: If your financial situation is more complex due to investment income, multiple sources of income, or significant capital gains, a Self-Assessment return may be required.
- Those receiving a pension: Retired individuals have previously not needed to prepare a tax return may find that their pensions increase due to inflation. As the personal allowance is capped, this increase may exceed the threshold and mean they now must prepare a self-assessment tax return.
Our Self Assesment services include:
We can complete your self-assessment tax return, accurately calculating your tax liability and ensuring timely submission to HMRC, and handling all required documentation, including income, expenses, and deductions.
To minimise your tax liability, we can advise on allowances, tax reliefs, and deductions available based on your personal or business circumstances. This might include claiming expenses if you're self-employed, capital gains tax reliefs, or other allowable deductions.
Organising and verify your income records, ensuring they align with HMRC requirements. We can also advise on keeping accurate records for the future, reducing the likelihood of errors or omissions long-term.
For those with investments or property disposals, we can help calculate and manage CGT obligations, optimising any exemptions or allowances available.
If you receive queries or compliance checks from HMRC, our team can handle these communications on your behalf, reducing stress and helping ensure the process runs smoothly.
How self assesment will benefit you
- Maximise Savings: By implementing effective tax planning strategies, you can uncover deductions and credits to lower your taxable income, ultimately saving you money.
- Avoid Penalties: Remaining compliant with tax regulations on time ensures you steer clear of costly fines and interest, safeguarding your financial well-being.
- Financial Clarity: Organised tax planning helps you understand your financial situation clearly, empowering you to make informed decisions.
- Future Preparedness: Proactive tax strategies aren’t just about the present; they’re about securing your financial future, including retirement and investment aspirations.
- Peace of Mind: Entrusting your tax matters to professionals alleviates stress and provides a sense of security, freeing your time to focus on personal and professional growth.
Tips for completing your self-assement tax return:
- Stay Informed: Keep up to date with changes in tax policy, as they can have a significant impact on your financial situation. Understanding the personal allowance threshold is crucial.
- Record Keeping: Maintain accurate financial records, including income, expenses, and relevant deductions. Good record-keeping makes it easier to complete your Self-Assesment return accurately.
- Seek Professional Advice: If you need clarification about your tax obligations or assistance navigating the Self-Assessment process, consider consulting a tax advisor or an accountant. They can help you optimise your tax position and ensure compliance.
- Plan Ahead: Plan your finances to minimise the impact of the frozen personal allowance; this might include exploring tax-efficient investments, pensions, and other strategies to reduce your overall tax liability.
At Bevan Buckland LLP, we are here to assist you in managing your tax responsibilities, ensuring that you meet your obligations and make the most of available tax planning opportunities. If you have any questions or require expert guidance on Self-Assessment tax returns, do not hesitate to contact us by email or by calling 01792 410100.
