Self-assessment can seem daunting, especially for high-net-worth individuals with complex income streams.
With so many misconceptions circulating, it’s important to separate fact from fiction to avoid unnecessary stress, missed deadlines, and potential penalties.
In today’s Tax Tuesday, we’ll tackle some of the most common myths surrounding self-assessment so you can stay compliant and in control of your tax affairs.
Fact or fiction? I don’t need to file if I’m on PAYE.
Fiction. Even if most of your income is taxed via PAYE, you may still file a self-assessment for additional sources like dividends, rental income, or capital gains.
It is worth noting that your tax can be collected through your PAYE tax code if your liabilities are less than £3,000. If you would prefer your tax collected in this way, you must submit your return by 30 December at the latest.
Fact or fiction? I can skip reporting overseas income.
Fiction. Generally, UK domiciled and resident individuals with income from abroad (i.e. outside of England, Scotland, Wales and Northern Ireland) must declare it, even if it’s taxed abroad. This is to give HMRC better transparency over foreign earnings, investments, or property.
Fact or fiction? Only entrepreneurs need self-assessment.
Fiction. While business owners often file, investors with significant interest or dividend income may also require one, regardless of employment status.
Fact or fiction? My accountant handles everything.
Fiction. Whilst your accountant can prepare your return, they rely on the information and documents from you regarding your income streams in order to do so. The sooner you can get this information to them, the quicker you can get your return submitted.
Fact or fiction? Once I’ve submitted my return, my tax bill is due.
Fiction. Submitting your tax return early doesn’t mean you are required to pay your tax bill early. Any tax owed for the 2023/24 tax year is due 31 January 2025.
Early submission of your self-assessment means that you will have plenty of time to budget for the payment.
Fact or fiction? I may still need to file a return even if I don’t owe any tax.
Fact. Even if no tax is owed, you may still need to file a self-assessment to claim tax refunds or tax relief on business expenses, charitable donations, or pension contributions. Additionally, filing may be necessary if you wish to pay voluntary Class 2 National Insurance Contributions, which can help protect your entitlement to certain benefits, including the State Pension.
How can we help?
Preparing for your self-assessment tax return doesn’t have to be a daunting task. By keeping an eye on important deadlines and taking steps to submit early, you can make the process as smooth as possible. Upcoming deadlines and tips for a smooth self-assessment process can be found in our previous Tax Tuesday: Are you ready? Your guide to self-assessment tax returns.
Our Personal Tax team handles all aspects of personal tax return preparation and submission, ensuring accuracy and compliance while maximising your tax efficiency. Our diverse client base includes high-net-worth individuals, owner managed businesses and non-domiciled individuals.
If you would like assistance with your upcoming tax return, please email tax@haroldsharp.co.uk or call 0161 905 1616.