HM Revenue and Customs (HMRC) uses Self-Assessment as a tax collection system, which is usually automatically withdrawn first from salary income, then from pensions and other income.
You must know that all self-employed persons or persons that are not self-employed but do benefit from other incomes, must obligatorily declare them, by completing a fiscal declaration every year. So, it is your responsibility to submit a Self-Assessment at the end of each tax year, starting with the 6th of April.
In the Self-Assessment, it is necessary to show your income and capital earnings. You and claim tax allowances and reliefs that you are entitled to, including a Tax Return.
It is good to know that HMRC can request proof of your records, and if you do not have them, you might receive a penalty. This is a legal requirement, and for convenience, record keeping can be done both on paper and digitally.
Regardless of whether you are self-employed, or an employee where your income is taxed entirely under PAYE, but your received other income you are still required to complete a tax return or if you are confused about it, simply contact HMRC for informing them and even ask for the Self-Assessment to be withdrawn, which means that it is not necessary to complete the declaration if HMRC approves this.
How do you know if you have to file a Self-Assessment Tax Return?
The following criteria outlines who need to complete a Self-Assessment and/or Tax Return:
- You are Self-employed and earn more than £2000/year
- You are a Company Director and received dividends from ownership
- You receive untaxed income not collected through a PAYE tax code
- You are a Trustee
- You are a Minister of religion
- You receive taxable foreign income
- You earned £2,500 or more in untaxed income, e.g., renting out a property
- earn £100,000 or more a year
- have savings or investment income of more than £10,000 before tax
- are the highest earner in a family claiming child benefit, if you earn over £50,000
* Be aware of the fact that some employed individuals and pensioners may also need to file a Self Assessment Tax Return depending on circumstances.
Regarding TAX RETURN ON CHILD
>> Regarding Child Benefit, they are paid to adults who take care of children up to 16 years old, or even 20 years old if they are still in the process of schooling or even training. Parents are required to pay back 1% of the Child Benefit for every £ 100 earned over £ 50,000 a year.