As tax season approaches, many individuals may find themselves wondering if they need to register for self-assessment. HM Revenue and Customs (HMRC) recently issued a press release addressing common myths surrounding self-assessment registration, and it's important to understand the facts to avoid any unnecessary penalties or confusion.
If you are required to complete a self-assessment tax return for the first time for the 2023-24 tax year, you must inform HMRC by 5 October 2024. Below, we'll debunk some of the most common myths regarding self-assessment and clarify the realities.
Myth 1: "HMRC hasn't contacted me, so I don't need to file a return."
Reality: It is the responsibility of each taxpayer to determine whether or not they need to complete a tax return, even if HMRC hasn't contacted them. You may need to register and submit a tax return if you:
- Have started self-employment and earned more than £1,000 in gross income.
- Earned below £1,000 but want to pay voluntary Class 2 National Insurance contributions to protect your pension and benefit entitlements.
- Have become a new partner in a partnership.
- Have received more than £2,500 in untaxed income.
- Need to pay the High Income Child Benefit Charge because you or your partner earns more than £50,000 and receive Child Benefit.
Myth 2: "I need to pay tax as soon as I file my return."
Reality: The deadline for paying tax for the 2023-24 tax year is 31 January 2025. You can submit your return at any time before this, and the tax can be paid separately, as long as it is paid by the January deadline.
Myth 3: "I don't owe any tax, so I don't need to file a return."
Reality: You may still need to file a tax return to claim tax refunds, relief on business expenses, charitable donations, or pension contributions. You will also need to complete a return if you wish to pay voluntary Class 2 National Insurance contributions to safeguard your pension and benefit entitlements.
Myth 4: "If HMRC no longer requires me to file, they won't expect a return."
Reality: If you no longer need to file a return, such as after ceasing self-employment or rental activities, you must inform HMRC as soon as possible. If HMRC sends you a notice to file and you fail to respond, they will continue to expect a return and may issue penalties for non-compliance.
Myth 5: "I need to file a return for items sold while decluttering."
Reality: Sales of personal items such as clothes, books, or CDs through online platforms do not generally trigger the need to file a tax return or pay tax. This applies to items sold during a typical 'clear out' of household belongings.
Conclusion
Understanding whether you need to register for self-assessment is crucial for ensuring compliance with HMRC regulations. If you are unsure about your specific situation or need assistance in filing your return, do not hesitate to contact us. We are happy to help you determine your obligations and liaise with HMRC on your behalf.
For more information, you can also visit the official guidance: HMRC: Self-Assessment Myths Debunked.