Penn Accounts - Self Assesment

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Self Assesment

Anyone over 18 who is resident or ordinarily resident in the UK, is required by law to declare all of their income, annually, from any source - whether it has arisen in the UK or overseas.

You may be required to submit these details in a self assessment tax return, which will have been issued by the tax office each year, on or after 5th april.

When you send in your return, you are also required to calculate any income tax or capital gains tax that is payable. This is called "Self Assessment"

We recommend that you appoint Penn Accounts to prepare, submit and agree your self assessment tax return for you.

We will check all of the information sent to you by the Tax Office, and advise you if it is correct.

We will advise you to make the correct payments on account of your income tax and capital gains tax liabilities, in due time, to avoid any interest and penalty charges that might arise.

Not everyone will have received an income tax return. For example, if you are employed or retired with no other sources of income.

When Will I Need To Complete A Tax Return

A tax return is required if you:

are self employed or in a partnership

are a company director

Are a name or member of lloyd's

Are a minister of religion

have income from letting any property or land you own (but if you are an employee and this income is less than £2,500 a year a tax return may not be necessary)

receive other untaxed income and the tax due on it cannot be collected through a paye tax code

receive annual income from a trust or settlement, or any income from the estate of a deceased person, and further tax is due on that income

have taxable foreign income, even if you are claiming that you are not normally resident in the UK (including non-resident landlords)

What If I Am An Employee Or A Pensioner

If you are an employee or pensioner, you will need to submit a self assessment tax return in these circumstances:

if you have annual income from savings or investments of £10,000 or more (before tax)

if you have annual income of £100,000 or more

have tax due at the year end that cannot be collected through your paye tax code for the following year

if you have untaxed income of £2,500 or more (but some pensioners may be able to pay the tax on this through their paye coding)

if you have annual claims against tax for expenses or professional subscriptions of £2,500 or more

if you are 65 and over and entitled to some age related personal or married couple's allowance but not the full amount (unless you have very straightforward affairs).

Capital Gains Tax

You will also be required to submit a self assessment tax return in these circumstances:

If you have sold or given away chargeable assets worth more than 4 times the annual exempt amount. For 2005-06 the annual exempt amount is £8,500 so that is £34,000,

deduct losses but your gains before any losses or taper relief are more than the annual exempt amount, or

do not deduct losses but your gains after taper relief are more than the annual exempt amount, or

want to claim an allowable capital loss, or make any other capital gains claim or election for the year.

Paying Your Tax Liabilities

Before you receive your income tax return, you may have already received a request from the tax office to make a payment on account, on or before 31st January , during the tax year, together with a statement of account showing an amount due.

It is most important that you contact Penn Accounts immediately so that we can confirm that the amount demanded is correct. This amount should be based upon one half of the previous year's income tax liability.

The second half of your income tax liability will be advised to you on or before 31st July following the end of the tax year. You should receive an amended statement of account showing the amounts that you have paid and the remaining liability.

If you have submitted your tax return by 30th September, the tax office will calculate your income tax liability for you and advise you of any refund due or underpayment required, taking the payments on account into consideration.

The resulting balance will be due on or before 31st January in the following calendar year.

If you submit your return after 30th September , you are required to complete the calculation yourself.

The deadline for submission of your self assessment tax return is 31st January following the end of the tax year. If you do not meet this deadline you will be required to pay an automatic late filing penalty of £100.

This is also the date by which you must have paid the balance of any outstanding income tax. If you don't meet this deadline, you will be charged an automatic 5% surcharge on top of the amount of income tax due. You will also have to pay interest on the outstanding liability.

If there is any Capital Gains Tax liability, payment will also be due on or before 31st January following the end of the income tax year in which the liability arose.