Self assessment is the name given to the UK regime of personal taxation, introduced in 1996/97. Self assessment does not apply to all taxpayers, only to those who are self employed or those whose tax affairs are too complicated to be fully dealt with under the normal PAYE system, such as:
- some directors
- individuals who have an annual income in excess of £100,000
- individuals who receive income from land and property
- individuals who receive taxable foreign income over £300 p.a
- individuals who receive income from a trust or settlement
- individuals who have capital gains tax to pay
- individuals who have dividend income in excess of £10,000
- individuals who have untaxed income that can’t be taxed through PAYE
HM Revenue and Customs will issue a self assessment tax return for a particular year shortly after the end of that tax year. The taxpayer has until 31 January of the following year to complete and file the tax return online. Tax returns submitted by paper are due by 31 October.
Under the self assessment penalties regime, if you fail to submit your tax return on time, a fixed rate penalty of £100 results, even if you have no tax to pay or have paid the tax you owe. Further penalties are as follows:
|Length of Delay
|1 day late
|A penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.
|3 months late
|£10 for each following day – up to a 90 day maximum of £900. This is as well as the fixed penalty above.
|6 months late
|£300 or 5% of the tax due, whichever is the higher. This is additional to the penalties above.
|12 months later
|£300 or 5% of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100% of the tax due instead. These are additional to the penalties above.
Due dates for payment under self assessment
You must pay any tax you owe by 31 January following the end of the tax year. For example, for the tax year 2022-23 (ending on 5 April 2023) you must pay any tax you owe by 31 January 2024.
The payment deadline is the same for both paper and online returns.
You need to pay one or both of the following:
- any tax you still owe for the previous year
- the first of two’ payments on account’
Payments on account are part payments towards your next tax bill. You don’t always have to pay these – it will depend upon the amount of tax due and the kind of income you receive.
This is your deadline for making any further payments on account. For example on 31 July 2023 you’d make your second payment on account for the 2022 – 23 tax year.
This ensures that by 31 January 2023, you have fully paid any tax owed for the tax year 2022 – 23.
Capital Gains Tax
Individuals, companies, partnerships and trusts are liable to capital gains tax on the disposal of chargeable assets.
Individuals pay capital gains tax on any gains arising in a tax year at a flat rate of 10% or 20% (18% or 28% for residential properties).
There is a 10% tax rate for disposals qualifying for Business Asset Disposal Relief.
We can assist with calculating your capital gains tax liabilities, submitting returns and forward planning for disposals to minimise your liability.
Inheritance tax is paid on an estate when somebody dies. It can also be payable on trusts or gifts made during somebody’s lifetime. In most cases you must pay inheritance tax within 6 months of the end of the month of death.
More and more people are choosing to live and work abroad, and Jenner & Co are experienced in advising individuals both coming to and leaving the UK.
A taxpayer’s residence, ordinary residence, and domicile have important consequences in establishing the treatment of their UK and overseas income.
We can assist with determining your personal residency status and calculating potential tax liabilities as well as preparing your self assessment tax return. We can advise on any double tax relief available when income is taxed both abroad and in the UK and assist with calculating capital gains tax liabilities when either the asset or the owner is abroad.
A taxpayer (or partnership) with rental income is treated as running a business. Rents received on all properties are pooled and expenses deducted in arriving at the profit or loss to be included in the self assessment tax return.
If you let property abroad, you may have to pay UK tax on the rental income. Various expenses can be deducted from your rental income. We can advise on what is allowable for income tax purposes and what is deductible for capital gains tax purposes if you decide to sell the property.