HMRC will issue tax returns to those that they believe need to submit a tax return. You would be expected to complete a tax return if you fall into the below criteria within the tax year.
- If you are working for yourself.
- If you are a company director and have been issued with a return (excluding not for profit).
- If you receive income from savings, investments or dividends.
- If you have property income.
- If you have any other income received that has not been taxed already such as tips or commission.
- If you are in receipt of child benefit and somebody in your household earns over £50,000.
- A partner in a business partnership.
- You have capital gains
The list is not exhaustive but you can also check on Gov.uk to see if you need to submit a return.
If HMRC haven’t issued you with a notice to file a tax return and you feel you should be completing a tax return then get in touch with them to check using the helpline 0300 200 3310 but be warned it can be pretty difficult to get through at this time of year so try to call close to the open or closing time.
The phone line is open 8am-8pm Monday to Friday and 8am to 4pm on Saturday.
If you have received a return in error
Sometimes when you first register for self assessment it can trigger a notice to file for the year prior to registering.
Don’t worry too much about this as a simple call to HMRC is all you will need to ask them to remove the notice to file for that year explaining that your business was not trading at the time.
I notice a lot of clients receiving notice’s to file when they first register.
Do not ignore a notice to file, even if you know that you don’t need to complete a tax return you must take action and communicate this to HMRC so that they can correct the system.
Income below £1,000
If your earnings are below £1,000 during the tax year then you have no taxable income to declare as you will receive full relief from the trading allowance so there is no need to prepare accounts and no need to submit a tax return.
Again if you receive a notice to file but your income was below the £1,000 trading allowance, just give HMRC a call and let them know.
Do bear in mind that there are some instances where you may still want to submit a tax return to qualify for certain benefits such as maternity allowance and tax free childcare.
Income Above £1,000
If your earnings are above £1,000 you will need to complete a tax return but you also have the option to deduct the £1,000 trading allowance against the total profits to obtain partial relief to reduce the taxable profits, instead of claiming for tax deductible expenses.
It is important to note that if your expenses exceed £1,000 then it would not be beneficial to use the trading allowance in this way as you are unable to deduct the cost of expenses.
You would need to prepare accounts to see if the trading allowance would be beneficial to you.
I do hope this is helpful for those that are tackling the tax return for the first time. Do reach out and connect if you have read the article or if you have any questions at all.
Or Book a free call today to see how we can save you time and taxes
Are you on facebook? Why not check out the Salon and Beauty Therapist Tax Facebook Group to see how other members survive tax season and more.
Before you go..
Please check out my interview with the amazing Carl Reader on The Carl Reader Show’ – Ria-Jaine Raw & Uncut and Katie Godfrey, owner of KG salon, KG franchise and Lash training academy on‘The Life Of KG’ – Guest Ria-Jaine
Friendly disclaimer: The information contained in this article is for guidance and information purposes only. It should not be relied upon as full and complete accounting, tax or legal advice. For specific advice relevant to your own situation please speak to Ria-Jaine MAAT or another professional direct.