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Understanding When to Submit a Tax Return in the UK

Navigating the world of taxes can be daunting, especially if you’re new to the process or if your financial circumstances have changed. It’s important to understand when you are required to file a tax return to stay compliant with HMRC guidelines and ensure you are managing your finances effectively. This guide will walk you through the basics, ensuring an easy read for those who are not tax experts.

Who Needs to File a Tax Return?

Generally, you will need to submit a tax return if one or more of the following apply to you:

  1. Self-Employment: If you are self-employed as a sole trader and earned more than £1,000 before deducting any expenses in the last tax year, you need to file a tax return.
  2. Partnership Business: If you are a partner in a business partnership.
  3. Rental or Other Income: If you have income from renting out property or other untaxed income such as tips or commission.
  4. Foreign Income: If you have income from abroad that you need to pay tax on.
  5. High Income: If your income was over £100,000, regardless of employment type.
  6. Capital Gains: If you have made profits from selling assets like shares or property that are above the annual exempt amount.
  7. Child Benefit: If you or your partner’s income was over £50,000 and one of you claimed Child Benefit.
  8. Other Reasons: If you received a P800 from HMRC saying you didn’t pay enough tax last year.

First-Time Filers: Getting Started

If you’re filing your tax return for the first time, the process may seem intimidating. Here are the steps you should take:

Returning Filers: When to File Again?

If you’ve filed tax returns in the past but then stopped because your situation changed (e.g., you became an employee and were taxed through PAYE), you might wonder if you need to file again. Here are a few scenarios where you should consider filing a tax return:

By keeping track of changes in your income and employment benefits, you can ensure that you remain compliant with HMRC regulations and avoid any unexpected tax bills. Remember, if your income or circumstances change significantly, it’s a good idea to reassess your tax filing needs.

When in Doubt, Contact Us!

Tax can be complex, and circumstances can change year by year. If you’re unsure about whether you need to file a tax return or if you need help with the process, don’t hesitate to reach out. Contact us at personal.tax@cooperfaure.co.uk, and let our experts provide you with tailored advice and support.

Remember, staying proactive about your tax obligations ensures you remain compliant and can avoid potential penalties. Let us help you manage your tax commitments with ease.

Spring Statement 2024

The Chancellor of the Exchequer Jeremy Hunt delivered his Spring Budget 2024 on Wednesday, March 6, 2024. He announced a series of tax cuts and spending plans that aim to boost the UK economy and ease the pressure on households and businesses. Here are some of the key points from the budget and how they may affect you.


National Insurance Contributions

The main rate of employees’ National Insurance contributions (NICs) will be reduced from 10% to 8% from April 2024, benefiting around 27 million workers with potential savings of up to £450 per year. The main rate of Class 4 NICs for the self-employed will also drop from 9% to 6% from April 2024, a further reduction after the abolition of Class 2 NICs. This means that the self-employed will pay the same rate of NICs as employees on their profits above the lower profits limit of £9,568.

Capital Gains Tax

The higher residential property Capital Gains Tax (CGT) rate will be reduced from 28% to 24% from April 2024. This will apply to gains from the sale of second homes and buy-to-let properties. The basic rate of CGT for residential property will remain at 18%. The annual exempt amount for CGT will also remain at £12,300 for individuals and £6,150 for trusts.

Stamp Duty Land Tax

The stamp duty relief for buying multiple homes at once, known as Multiple Dwellings Relief (MDR), has been scrapped from June 1, 2024. This means that buyers of more than one property in a single transaction will have to pay higher rates of stamp duty on each property, regardless of whether they are residential or non-residential. The higher rates are 3% on top of the normal rates for properties up to £500,000, 8% for properties between £500,001 and £925,000, 13% for properties between £925,001 and £1.5 million, and 15% for properties above £1.5 million.

Furnished Holiday Lettings

The furnished holiday lettings (FHL) regime will be abolished from April 2025. This means that FHLs will no longer be treated as a separate category of property income for tax purposes. Instead, they will be taxed as normal rental income, subject to the same rules and allowances as other landlords. This will affect the eligibility for certain reliefs and deductions, such as capital allowances, loss relief, and CGT rollover relief.

Non-Dom Tax Status

The non-dom tax status will be removed in April 2025. This means that foreign nationals residing in the UK but officially domiciled overseas will no longer be able to avoid paying UK tax on their foreign income or capital gains. Instead, they will be taxed on their worldwide income and gains, regardless of whether they remit them to the UK or not. A more ‘straightforward’ residency-based system will be implemented in 2025, with details to be announced later.

Parents

The high-income child benefit charge threshold will be raised from £50,000 to £60,000 and the taper – which applies when an individual’s income increases beyond the threshold of £60,000, meaning they will gradually lose eligibility for child benefit – will extend up to £80,000. No one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether. And because of the higher taper and threshold, nearly half a million families with children will save an average of around £1,300 next year.

Business Tax

Businesses can expect full expensing to be extended to include leased assets in the future, with the Chancellor announcing he will publish draft legislation to cover this extension. This will allow businesses to deduct the full cost of leasing certain assets from their taxable profits, rather than spreading the deduction over the lease term. The types of assets that will qualify for full expensing are yet to be confirmed.

The VAT threshold for small businesses has been increased from £85,000 to £90,000 from April 2024. This means that approximately 28,000 small businesses will drop below the threshold for paying VAT. The registration and deregistration thresholds for VAT will be frozen until April 2027.
Fuel Duty has been frozen for an additional 12 months and the 5p cut to petrol taxes that was introduced in 2022 remains in place. This will benefit motorists and businesses that rely on road transport.

Summary

The Spring Budget 2024 has introduced a number of tax changes that will have a significant impact on individuals and businesses. Some of the main winners are employees, self-employed, and property sellers, who will benefit from lower NICs and CGT rates. Some of the main losers are property buyers, FHL owners, and non-doms, who will face higher stamp duty, income tax, and CGT liabilities. Businesses will also see some changes to their tax treatment, with some positive measures such as full expensing and higher VAT threshold, and some negative ones such as the removal of MDR and FHL regime.
If you have any questions about how the Spring Budget 2024 affects you or your business, please contact us for expert advice and guidance.