How to File a UK Self-Assessment Tax Return
Almost 12 million people had to file an annual UK self-assessment tax return by the 31 January 2020 deadline. How do you know if you are a UK citizen or resident that must submit a self-assessment tax return? We’re shedding light on who must submit a UK tax return and how you can complete and submit a return.
What is a tax return?
In most jurisdictions, individuals who receive income other than from regular employment, such as from investments and property from foreign sources, must report this to their local tax authority. They usually carry this out on a form known as an income tax return or a self-assessment tax return. The pertinent tax authorities use the information that you report on an income tax return or self-assessment tax return to calculate how much tax you owe for a particular tax year.
In the UK, the primary self-assessment tax return is known as the SA100, and those required to submit it must present it to the UK tax authority known as HM Revenue and Customs (HMRC).
Do I need to do a tax return?
If your only source of income is from your employment, it’s doubtful you’ll have to submit an income tax return since your employer will automatically deduct any tax you owe and send it to HMRC.
So, what circumstances would require you to submit an income tax return? In most cases, you would if your situation fits one of the following:
- You received income from self-employment over £1,000.
- You were a partner in a business partnership.
- You received income from property or foreign sources.
- You were the beneficiary of a trust.
- You disposed of assets.
- Or you received income from a pension scheme.
We will go into more depth into these requirements, but HMRC will typically notify you if you have to complete an income tax return for the year.
How do I complete a tax return?
If you wish to complete an income tax return on your own, you can either file electronically or on paper via post.
You can download the UK income tax return online from HMRC’s website. However, a note of caution: to submit a tax return online, you must receive an activation code from HMRC. They will send it to you in the post after registering with HMRC online, but it can take up to 10 working days to arrive (and up to 21 days if you are abroad). Therefore, if submitting a tax return online for the first time, you should give yourself plenty of time before the tax return deadlines that we will reveal later on in this article.
You can also hire an accountant to complete the tax return on your behalf based on the information you provide them about your income and expenses for the given tax year. What makes using an accountant beneficial? Tax rules tend to be intricate in most countries, and the UK is no exemption. You must fill out your self-assessment tax return correctly to avoid mistakes that could result in subsequent penalties. Professionals can help you minimise the potential risks. They can also help you legally reduce your tax bill by utilising relief efforts that HMRC does not widely publicise.
The UK self-assessment tax return for 2019/20
The basic UK self-assessment tax return for 2019/20 consists of eight pages. Here, you report information including your personal details (name, address etc), income from interest and dividends from UK banks and building societies, income from UK pensions and annuities and income not reported on supplementary pages (explained next). There are also sections on student loan repayments, child benefits for those with high incomes and the marriage allowance, which provides taxpayers earning below £12,500 the opportunity to transfer part of their tax allowance (the tax-exempt portion of their income) to a spouse and reduce their tax bill.
However, if you are required to complete a UK self-assessment tax return, it is highly likely that you will need to fill in one or more of the ‘supplementary pages’ listed on the second page of the self-assessment tax return. They are:
You should fill out the ‘Employment’ page if you:
- Were employed in full-time, part-time or casual employment.
- Received income as a company director.
- Held an office, such as chairperson, secretary or treasurer and received income for that work.
- Worked for one person through another company or partnership, for example, agency work.
- Were resident in the UK and received a salary from any foreign employment.
You must fill out separate employment pages for each job, directorship or office.
You should fill out the ‘Self-Employment’ pages if you worked for yourself or worked as a subcontractor in the construction industry, and the total taxable turnover from all of these businesses was over £1,000.
You are exempt from tax if the combined receipts from your self-employment and certain miscellaneous income does not exceed £1,000. You do not have to report them on the self-assessment tax return unless the receipts are from a connected party.
However, those with an income of no more than £1,000 may still opt to file a self-assessment return. Filing, for example, would allow you to claim relief for losses, to carry losses forward to a subsequent tax year, or to build entitlement to the state pension through the voluntary payment of Class 2 National Insurance Contributions.
There are two types of self-employment pages for:
- Those with straightforward tax affairs and with an annual turnover of less than £85,000 may use the self-employment ‘short pages.’
- Those with more complex tax affairs and with income above £85,000 must use the self-employment ‘full pages.’ These include those needing to adjust their profit.
There are two types of ‘Partnership’ pages – short ones and full ones. Each partner must fill in their own ‘Partnership’ pages, and one partner will have to complete the SA800, ‘Partnership Tax Return.’
You must complete the ‘UK property’ pages if you received income from:
- Any UK property rental including rents from land owned or leased out
- Furnished holiday letting from properties in the UK or European Economic Area (EEA)
- Letting furnished rooms in your own home of over £1,000.
Note that you must complete the self-employment pages if you provided meals and other services as part of letting furnished rooms. You must also report any income from a foreign property business in the ‘Foreign’ pages of the form that we’ll go over below.
You do not need to report property income of less than £1,000 in the self-assessment tax return. However, as with self-employment, you may still report such income if you wish to claim loss relief or carry forward losses.
Income must be reported in the ‘Foreign’ pages if you received:
- Interest above £2,000 and income from overseas savings
- Dividends over £300 from foreign companies
- Distributions and excess ‘reported income’ from reporting offshore funds (taxable income accumulating in an offshore fund not yet received)
- Overseas pensions (including taxable lump sums from overseas schemes treated as pension income), social security benefits and royalties
- Income from land and property abroad over GBP1,000, excluding furnished holiday lettings in the EEA, which you should report in the ‘UK property’ pages (see above)
- Discretionary income from non-resident trusts
- Income or benefits from a person abroad or a non-resident company or trust (including a UK trust that has either been or has received, profit from, a non-resident trust)
- Gains on foreign life insurance policies or disposals in offshore funds
You should also complete the Foreign pages if you wish to claim a foreign tax credit and avoid double taxation from the UK and a foreign jurisdiction.
You must complete the Trusts pages if you were:
- a beneficiary of a trust (excluding ‘bare’ trusts) or settlement
- the settlor of a trust or settlement whose income is deemed to be yours
You must complete the Capital Gains summary along with the enclosed calculations if you:
- sold or disposed of chargeable assets worth more than £48,000
- had chargeable gains before losses of more than £12,000
- want to claim an allowable capital loss or make a capital gains claim or election for the year
- were not domiciled in the UK and are claiming to pay tax on your foreign gains on the remittance basis (see below)
- were chargeable on the remittance basis and have remitted foreign chargeable gains of an earlier year
- sold or disposed of an interest in UK land or property and were not resident in the UK or you were a UK resident and overseas during the disposal
You should also fill out the ‘Additional Information’ section (see below) if taxpayers had any chargeable event gains.
Residence, remittance basis, etc.
You should fill out these pages if you:
- are not a UK resident
- arrived in the UK during the 2019 to 2020 tax year and became a UK resident
- have a domicile outside the UK
- have foreign income or capital gains and want to use the remittance basis for the 2019 to 2020 tax year
The remittance basis is an alternative tax treatment available to individuals who are resident but do not live permanently in the UK and have foreign income and gains. By opting to be taxed under the remittance basis regime, you only pay UK tax on the income or benefits you bring to the UK. You must pay an annual charge of £30,000 or £60,000, depending on how long you have been resident in the UK to benefit from this regime.
You must complete these other pages if you have:
- Interest from UK securities, peer-to-peer loans, deeply discounted securities, and accrued income profits
- Gains from life insurance policies (chargeable event gains)
- Stock dividends, bonus issues of securities and redeemable shares
- Business receipts taxed as income of an earlier year
- Income from share schemes
- Received lump sums or compensation from an employer, or foreign earnings not taxable in the UK
Tax return deadlines
In the UK, there are two tax return deadlines: one for tax returns submitted online; the other for tax returns filed in paper form.
The deadline for a tax return submitted online is 31 January in the year following the end of the tax year to which return relates. As the UK tax year runs from 6 April to 5 April, the deadline for submitting an online tax return for the 2019/20 tax year (6 April 2019 to 5 April 2020), is 31 January 2021. The deadline for submitting a paper tax return is three months earlier, meaning the deadline for the 2019/20 tax year is 31 October 2020.
Taxpayers who wish HMRC to collect any tax due from their wages or pensions should submit an online tax return by 30 December 2020. The deadline for paying any income tax and National Insurance Contributions due is the same as the filing deadline.
Beware of penalties
A £100 penalty is automatically applied if a self-assessment tax return is submitted late, even if no tax is due. Additional penalties apply when tax returns are three, six and 12 months overdue.
Are you seeking advice for your next self-assessment tax return?
One of the most crucial decisions for any global citizen is their tax burden at home and abroad. Fortunately, our global tax experts at Europe Emirates Group are ready to advise you on preparing your UK Self-Assessment Tax Return to ensure proper compliance with HM Revenue and Customs. Are you ready to get started? Contact us today.