2023/24 Self Assessment due:
Self Assessment
Who needs to file a self assessment tax return?
In the United Kingdom, individuals are required to file a Self Assessment tax return if they fall into one or more of the following categories:
Self-Employed Individuals
Landlords
Directors of Limited Companies
High Earners and Those with Complex Tax Affairs
Claimants of High-Income Child Benefit Charge
Those with Capital Gains
It's important to note that the criteria for filing a Self Assessment tax return may vary, and changes in personal circumstances can impact whether an individual is required to file. Consulting with a tax professional or checking with HM Revenue & Customs (HMRC) can provide specific guidance tailored to an individual's situation. Additionally, the deadlines for filing tax returns and making payments should be adhered to in order to avoid penalties.
The tax year in the UK runs from April 6 to April 5. With the deadline for filing a Self Assessment tax return online January 31 of the following year after the tax year end. A paper tax return would need to be filed by October 31 of the same year as the tax year ended. Penalties may apply for late filing, so it's crucial to meet the deadlines set by HMRC. You can register for a personal tax account from the government gateway website to help keep track of your personal tax and benefits situation,
Sole Trader
You should look at setting up as a sole trader if you are self-employed or plan to become self-employed in the near future. A sole trader is someone who works for themselves.
When registering as a sole trader, you agree to accepting personal financial risk, as your business is not a separate legal entity, you would be personally liable for any debts or legal action against your work. or business. This differs to a limited company, whereby business owners only have limited liability.
If you are self-employed, operate as a sole trader, or are a partner in a business, you are generally required to file a Self Assessment tax return. This includes freelancers, contractors, and those running their own businesses. Understanding the allowances available within each personal case is important to ensure that the correct amount of tax is being paid.
You can contact us to get expert advice in how to register and report your personal finances as a self employed individual.
Landlords
If you earn rental income from properties you own, you are usually required to report this on a Self Assessment tax return. Individuals Receiving Foreign Income: If you are a UK resident and have income arising outside the UK, you may need to declare it on a Self Assessment tax return.
Landlords in the United Kingdom are generally required to file a Self Assessment tax return if they receive rental income from letting out property. If you receive rental income from letting out property in the UK, you are required to report this income to HMRC through a Self Assessment tax return.
HMRC may issue notices requiring landlords to file a Self Assessment tax return. It's important to respond to such notices promptly and comply with the filing requirements.
Other Tax Considerations: Landlords may have other tax considerations, such as claiming allowable expenses, mortgage interest relief changes, or participation in the Making Tax Digital for Income Tax pilot.
Directors of Limited Companies
Directors of limited companies are not classed as self-employed; they’re simply required to report additional taxable income via Self Assessment.
If all your income is taxed at source, you don’t need to register for Self-Assessment and file a return. If HMRC has asked you to submit a Self Assessment tax return via a 'notice to file', but you have no additional taxable income to report, you can ask for the 'notice to file' to be withdrawn.
Directors will need to file a Self Assessment if they have additional sources of income beyond their salary, such as dividends, rental income, or other taxable earnings.
Directors with higher income levels may fall into the category of individuals who need to file a Self Assessment. This could include those subject to the High-Income Child Benefit Charge or individuals with income exceeding certain thresholds. Directors might need to report other taxable liabilities, such as capital gains, foreign income, or income from investments.
If you have any questions regarding your self assessment, please feel free to contact us.
High Earners
High earners in the UK are required to file a Self Assessment tax return if they meet the income threshold of £100,000, moving to £150,000 in the 2023/24 tax year, or have income that is not taxed at source through the PAYE (Pay As You Earn) system.
Income Thresholds
High earners above the threshold are required to file a Self Assessment tax return. The amount they earn will affect the amount of personal allowance they receive, which reduces as the total earning raise further above the threshold.
Additional Income Sources
If high earners have additional sources of income beyond their employment income, such as self-employment income, rental income, dividends, or other investments, they may be required to report this income through a Self Assessment.
High-Income Child Benefit Charge
Individuals with income exceeding £50,000 may be subject to the High-Income Child Benefit Charge. This may trigger the need to file a Self Assessment, even if the individual's only additional income is child benefit. Any income above £50,000 will have an affect on how much child benefit they must return back to HMRC.
Notification from HMRC
HMRC may issue notices requiring certain individuals, including high earners, to file a Self Assessment tax return. It's important to respond to such notices promptly and comply with the filing requirements.
Capital Gains Tax
Embarking on the journey of managing your capital gains tax (CGT) can be complex, but fear not – S and S Tax and Accounts is here to guide you through this financial landscape. We aim to empower our clients with knowledge, insights, and strategies to navigate the nuances of CGT effectively.
What is Capital Gains Tax, and Why Does it Matter to You?
Capital Gains Tax is a levy imposed on the profit realised from the sale or disposal of assets that have increased in value over time. This can include a diverse array of assets such as property, stocks, and business assets. Understanding CGT is crucial for optimising your financial position and ensuring compliance with HMRC regulations.
Calculation of Gain
Your taxable gain is computed by subtracting the original purchase price (cost basis) from the selling price.
Exemptions and Allowances:
Discover the assets and transactions that may be exempt from CGT, and learn about your annual tax-free allowance to shield a portion of your gains.
Rates and Thresholds
Familiarise yourself with the varying CGT rates based on factors such as the type of asset and your income level. the CGT rate vary from 10%-28% depending upon a few factors from the type of disposal to the income level you fall under.
Reporting and Payment
Learn about your responsibilities in reporting capital gains on your tax return and the process of payment. Disposal of residential properties since 27 October 2021 need to reported and the tax paid within 60 days of the transaction. Other gains vary in their reporting.
We employ strategic methods to help ensure that you maximise your gains, by planning in advance we can help navigate the complications of CGT through an efficient method.
Tax Planning
Uncover the power of strategic tax planning to optimise your CGT position. Timing can be crucial in minimising your overall tax liabilities.
Entrepreneur's Relief
If you're a business owner, explore how Entrepreneur's Relief can be a game-changer in reducing your CGT liability.
Losses Offsetting
Understand the strategic use of capital losses to offset gains, potentially reducing your CGT liabilities.
Inheritance Tax Considerations
Gain insights into how CGT interacts with Inheritance Tax, especially in scenarios involving asset transfers or inheritance.
At S and S Tax and Accounts, we're not just about numbers; we're about empowering you. Our dedicated team is here to guide you through the intricacies of CGT, ensuring you make informed decisions that align with your financial goals. Contact us today to explore personalised strategies, gain clarity on your tax obligations, and unlock the full potential of your financial success.
Inheritance Tax
In the intricate landscape of estate planning, Inheritance Tax (IHT) stands as a critical consideration for individuals and families. At S and S Tax and Accounts, we understand the importance of empowering our clients with knowledge and strategies to navigate the complexities of Inheritance Tax. We provide essential insights to help you make informed decisions and safeguard your legacy.
Understanding Inheritance Tax
Inheritance Tax is a tax levied on the estate of a deceased individual. It is applicable on the value of the assets and possessions left behind, commonly known as the estate. While IHT is a part of the broader estate planning process, understanding its key principles is vital for effective financial management.
Estate Valuation
The value of the estate, including property, investments, and possessions, determines the potential Inheritance Tax liability.
Nil Rate Band and Residence Nil Rate Band
Discover the concepts of the Nil Rate Band and Residence Nil Rate Band, which can impact the amount of your estate subject to Inheritance Tax. The current nil rate band stands at £325,000, with an additional Residence nil rate band at £175,000.
Exemptions and Allowances
There are various exemptions and allowances available, such as gifts, charitable bequests, and the annual gift allowance.
Lifetime Gifts
A key factor can be the implications of making lifetime gifts and how they may affect your Inheritance Tax position. Gifts made within final 7 years of the deceased life will incur a potential tax liability. Although this can be at a reduced tax band potentially.
We at S and S Tax and Accounts aim to help our clients plan in advance to ensure that any inheritance tax due is minimised. Planning is key to ensuring that those that are left the estate benefit from it to its potential.
Will and Estate Planning
It is essential to craft a well-thought-out will and engage in strategic estate planning to minimise potential Inheritance Tax liabilities.
Gifts and Trusts
Understand the benefits of making gifts during your lifetime and explore the strategic use of trusts for estate preservation.
Business and Agricultural Reliefs
There are reliefs available for businesses and agricultural property, potentially reducing the impact of Inheritance Tax.
Seeking Professional Advice
Collaborate with experienced professionals at S and S Tax and Accounts to develop personalised Inheritance Tax planning strategies aligned with your unique circumstances.
At S and S Tax and Accounts, we are committed to guiding you through the intricacies of Inheritance Tax. Our team of experts stands ready to provide personalised advice, ensuring you have the knowledge and tools needed to make informed decisions that protect your wealth and legacy. Contact us today to explore personalised strategies, gain clarity on your potential Inheritance Tax liabilities, and secure the future of your legacy. Your financial well-being and peace of mind are our top priorities.