Self Assessment tax returns can be a source of confusion, especially for first-timers. As deadlines loom, myths about who needs to register and when often create unnecessary stress.
HMRC has taken steps to clarify some of these common misconceptions, ensuring taxpayers are well-informed and prepared. Here’s what you need to know.
Introduction
As the 2023 to 2024 tax year progresses, HMRC is debunking myths surrounding Self Assessment registration, helping individuals understand their tax responsibilities.
This article addresses five common myths that could mislead those who need to file a Self Assessment return for the first time.
Myth 1: “HMRC Didn’t Contact Me, So I Don’t Need to Register”
One of the most pervasive myths is that HMRC will notify you if you need to file a Self Assessment tax return. In reality, it is your responsibility to determine whether you need to file. You might need to register if you:
- Are newly self-employed with earnings over £1,000
- Earn below £1,000 but wish to pay voluntary Class 2 National Insurance Contributions
- Have received untaxed income over £2,500
- Receive Child Benefit and your or your partner’s income exceeds £50,000
For more guidance, visit GOV.UK and use their free online tool to check if you need to register. Once registered, you’ll receive a Unique Taxpayer Reference (UTR), crucial for your tax return.
Myth 2: “I Have to Pay the Tax When I File My Return”
Another common misunderstanding is that the tax payment is due at the same time as filing your return. Contrary to this belief, the deadline to pay any tax owed is 31 January 2025.
You can file your return early but still have until this date to settle your tax bill. Additionally, HMRC offers a Budget Payment Plan, allowing you to spread the cost of your tax bill with weekly or monthly payments.
Myth 3: “No Tax Owed Means No Return Needed”
Some believe that if they don’t owe any tax, filing a return isn’t necessary. This is incorrect.
You might still need to file a return to claim tax refunds, tax relief on business expenses, charitable donations, pension contributions, or to pay voluntary Class 2 National Insurance Contributions.
Filing ensures you remain compliant and can benefit from any applicable tax reliefs.
Myth 4: “HMRC Will Automatically Remove Me from Self Assessment”
It is essential to inform HMRC if you no longer need to file a return. If you’ve stopped being self-employed or if your circumstances have changed, you must notify HMRC.
Failure to do so may result in continued reminders and potential penalties. For guidance on stopping Self Assessment, check HMRC’s YouTube videos or the GOV.UK website.
Myth 5: “HMRC Is Cracking Down on Online Sales”
Contrary to some online claims, selling personal items such as old clothes or books through online marketplaces does not trigger a Self Assessment filing requirement. There have been no changes to the tax rules in this area.
For clarity on selling online, refer to HMRC’s guidance available on GOV.UK.
HMRC’s Perspective
Myrtle Lloyd, HMRC’s Director General for Customer Services, emphasized,
“We want to ensure you are clear about your tax responsibilities. These myth busters and our resources on GOV.UK can help if you’re unsure about Self Assessment.”
HMRC offers various resources, including video tutorials and support on their website. They advise filing early to avoid errors and take advantage of spreading your tax bill. Keeping accurate records is crucial, as inaccuracies may result in penalties.
The Takeaway
Navigating Self Assessment can be complex, but understanding these common myths can simplify the process.
For more information and to register, visit GOV.UK. Stay informed to ensure compliance and avoid unnecessary stress as the deadline approaches.
- The deadline for paper returns is 31 October 2024; online returns are due by 31 January 2025.
- More than 97% of customers now file their Self Assessment tax returns online.
For further details on Self Assessment, refer to GOV.UK and HMRC’s online resources.
Sources: THX News & HM Revenue & Customs.
