No more tax returns for me...
Discussion
After my last self assessment I received a letter stating that I wouldn't need to fill in any more self-assessments as my circumstances didn't warrant it.
The cynic in me thinks this is because they always owe me money.
I usually claim about a grand back each year for my pension contributions, will I lose this return if I no longer fill in self-assessments, or will the IR work it out for me?
I'm a simple case so I can understand why I don't need to fill in any more forms (one salaried income, no benefits, no taxable expenses) but I'd prefer it not to cost me a £1000 each year.
The cynic in me thinks this is because they always owe me money.
I usually claim about a grand back each year for my pension contributions, will I lose this return if I no longer fill in self-assessments, or will the IR work it out for me?
I'm a simple case so I can understand why I don't need to fill in any more forms (one salaried income, no benefits, no taxable expenses) but I'd prefer it not to cost me a £1000 each year.
m-five said:
It just means that people with 'simple' tax affairs are no longer forced to do the SATR - although if you want to do one, there is nothing stopping you.
Well yes, but what I'd like to know is will I have to do a self assessment to get my money owed for the pension contributions?
The Inland Revenue are being extremely cheeky this year.
If you complete tax returns which show that you more or less pay the correct tax during the year by some other method (PAYE, deduction at source etc), THEY are taking it upon themselves to decide that YOU do not have to complete a return in future. BE VERY CAREFUL. They have no right to do this. In fact, they have no information to allow them to make this decision, unless they own crystal balls. How do they know what your circumstances are going to be in the future?
The legal responsibility for knowing that a tax return MUST be completed is YOURS, not the Inland Revenue's. YOU must be aware of the circumstances which dictate whether you are legally obliged to complete a return or not. MANY,MANY tax payers have insufficient knowledge of the extremely complex British tax system to know whether they can safely forego completing a return. If you are likely to receive tax refunds, it would be madness NOT to complete a return. Why pay TOO MUCH TAX????????
If you complete tax returns which show that you more or less pay the correct tax during the year by some other method (PAYE, deduction at source etc), THEY are taking it upon themselves to decide that YOU do not have to complete a return in future. BE VERY CAREFUL. They have no right to do this. In fact, they have no information to allow them to make this decision, unless they own crystal balls. How do they know what your circumstances are going to be in the future?
The legal responsibility for knowing that a tax return MUST be completed is YOURS, not the Inland Revenue's. YOU must be aware of the circumstances which dictate whether you are legally obliged to complete a return or not. MANY,MANY tax payers have insufficient knowledge of the extremely complex British tax system to know whether they can safely forego completing a return. If you are likely to receive tax refunds, it would be madness NOT to complete a return. Why pay TOO MUCH TAX????????
Eric Mc said:
MANY,MANY tax payers have insufficient knowledge of the extremely complex British tax system to know whether they can safely forego completing a return. If you are likely to receive tax refunds, it would be madness NOT to complete a return. Why pay TOO MUCH TAX????????
Being one of the tax payers with insufficient knowledge, I can assume from this that they won't take into consideration my pension contributions in future unless I fill in a tax return?
I was confused as to whether they would work it out for me without the self-assessment, because they know how much I earn, how much I pay to my pension and what the thresholds are.
If ALL your tax affairs are administered through the PAYE system, they MAY be able to sort out your tax coding correctly and therefore you MAY end up paying the absolutely correct tax entirely through PAYE. However, if you have income or reliefs which CANNOT be administered through the PAYE system and you pay tax at the 40% rate, there is a good chance that the PAYE paid through deduction on your salary WILL NOT be the correct tax due for the year. Obviously, you might have paid too much or you might have paid too little. The problem is - how do you know?
You cannot rely on your employer - their responsibility only stretches to applying the correct PAYE and NI to your salary BASED ON THE CODING THEY RECEIVE FROM THE INLAND REVENUE which is in turn BASED ON THE INFORMATION PROVIDED BY YOU - possibly through the last Self Assessent return you completed and possibly on Benefit in Kind information provided by your employer (if appropriate).
If you have income outside of work e.g. dividends, bank deposit interest, building society interest, rental income and god knows what else, the ONLY way the Inland Revenue can find out if tax is due by you(or tax refunds are due by them) is by you completing a Self Assessment return.
You cannot rely on your employer - their responsibility only stretches to applying the correct PAYE and NI to your salary BASED ON THE CODING THEY RECEIVE FROM THE INLAND REVENUE which is in turn BASED ON THE INFORMATION PROVIDED BY YOU - possibly through the last Self Assessent return you completed and possibly on Benefit in Kind information provided by your employer (if appropriate).
If you have income outside of work e.g. dividends, bank deposit interest, building society interest, rental income and god knows what else, the ONLY way the Inland Revenue can find out if tax is due by you(or tax refunds are due by them) is by you completing a Self Assessment return.
Eric Mc said:
If ALL your tax affairs are administered through the PAYE system, they MAY be able to sort out your tax coding correctly and therefore you MAY end up paying the absolutely correct tax entirely through PAYE. However, if you have income or reliefs which CANNOT be administered through the PAYE system and you pay tax at the 40% rate, there is a good chance that the PAYE paid through deduction on your salary WILL NOT be the correct tax due for the year. Obviously, you might have paid too much or you might have paid too little. The problem is - how do you know?
Aye, and all my tax stuff is done through PAYE. So how come I get a refund every year for my pension contributions, when they already know?
I don't understand it, but it seems like I'll need to fill in a self-assessment if I want my money back in future.
You are entitled to tax relief on pension contributions. Unfortunately, there are up to NINE different ways in which that tax relief can be obtained (nobody said tax was simple - or logical).
If you are paying into a personal pension scheme, you are probably getting automatic tax relief built into each contribution you make every month. This relief is only correct if you pay tax at a maximum rate of 22%. If you are a higher rate tax payer (i.e. you pay tax at 40%) you are entitled to a further amount of tax relief. This can only be obtained by notifying the Inland Revenue of the pension contributions you made in the year. The mechanism by which you do this is by completing a Self Assessment tax return. You will then either get a straightforward tax refund of this additional relief or they may give it to you by amending your current PAYE tax coding. They like to use the coding method if they can (it favours their cash flow) but if you tick the right box on the return they are obliged to give you the cash.
However, they need to made aware of these contributions every year as your contributions may change over time.
Sometimes pension relief is given by a straightforward deduction on your payslip - in these circumstances you may get tax relief at all the rates of tax you pay but it is not always clear if this is the case - often the employers are not really sure how your tax is being calculated - too much reliance on software sometimes!!!!
If you are paying into a personal pension scheme, you are probably getting automatic tax relief built into each contribution you make every month. This relief is only correct if you pay tax at a maximum rate of 22%. If you are a higher rate tax payer (i.e. you pay tax at 40%) you are entitled to a further amount of tax relief. This can only be obtained by notifying the Inland Revenue of the pension contributions you made in the year. The mechanism by which you do this is by completing a Self Assessment tax return. You will then either get a straightforward tax refund of this additional relief or they may give it to you by amending your current PAYE tax coding. They like to use the coding method if they can (it favours their cash flow) but if you tick the right box on the return they are obliged to give you the cash.
However, they need to made aware of these contributions every year as your contributions may change over time.
Sometimes pension relief is given by a straightforward deduction on your payslip - in these circumstances you may get tax relief at all the rates of tax you pay but it is not always clear if this is the case - often the employers are not really sure how your tax is being calculated - too much reliance on software sometimes!!!!
Eric Mc said:
If you are paying into a personal pension scheme, you are probably getting automatic tax relief built into each contribution you make every month. This relief is only correct if you pay tax at a maximum rate of 22%. If you are a higher rate tax payer (i.e. you pay tax at 40%) you are entitled to a further amount of tax relief. This can only be obtained by notifying the Inland Revenue of the pension contributions you made in the year. The mechanism by which you do this is by completing a Self Assessment tax return. You will then either get a straightforward tax refund of this additional relief or they may give it to you by amending your current PAYE tax coding. They like to use the coding method if they can (it favours their cash flow) but if you tick the right box on the return they are obliged to give you the cash.
I finally managed to get the revenue to put my pension contributions into my tax code, so I was getting the 22% relief directly through the pension company, and the other 18% through the tax code.
Still had to do a bloody tax return though. It just helped MY cash flow...
Yes - the tax code amendment is always based on one year old information (gleaned from the previous year's tax return). To keep the coding adjustments updated you MUST continue to submit returns.
The Inland Revenue MAY be willing to make changes to codings based on less formal notifications - such as telephone calls or letters. However, these are not within their normal framework of operations and much harder to pursue if problems arise. At least with the tax return you are dealing with a formal legal document.
I hope you keep copies of your returns, by the way.
The Inland Revenue MAY be willing to make changes to codings based on less formal notifications - such as telephone calls or letters. However, these are not within their normal framework of operations and much harder to pursue if problems arise. At least with the tax return you are dealing with a formal legal document.
I hope you keep copies of your returns, by the way
.I NEVER submit returns electronically. The lack of a paper trail could cause extreme difficulties if evidence was required later on to prove whether something had been notified correctly to the Inland Revenue or not. They have virtually NO responsibilities to retain information anymore. ALL the legal obligations now rest entirely with the tax payer.
I cannot stress enough how important it is that you retain a copy of some sort of what you submitted. You are required to keep all supporting documentation in respect of the return submitted for at least on year after the submission deadline date i.e 31 January. For the 2003/04 tax return, that means you must retain all the backup details of the figures entered on the return until 31 January 2006 at least.
It's five years for non-PAYE only Self Assessment tax returns.
I cannot stress enough how important it is that you retain a copy of some sort of what you submitted. You are required to keep all supporting documentation in respect of the return submitted for at least on year after the submission deadline date i.e 31 January. For the 2003/04 tax return, that means you must retain all the backup details of the figures entered on the return until 31 January 2006 at least.
It's five years for non-PAYE only Self Assessment tax returns.
Eric Mc said:
I cannot stress enough how important it is that you retain a copy of some sort of what you submitted. You are required to keep all supporting documentation in respect of the return submitted for at least on year after the submission deadline date i.e 31 January. For the 2003/04 tax return, that means you must retain all the backup details of the figures entered on the return until 31 January 2006 at least.
I do keep all the supporting documentation, just not the form itself, as I don't get sent a form anymore, just a letter saying go to this website and fill it in.
Yes - and it's dangerous, in my opinion.
I've just sent in a paper return to "fix" an electronically submitted return sent in by a client of mine before he took me on board. At least he had the foresight to print off the return before he pressed "send" so I could see all the mistakes he'd made.
I've just sent in a paper return to "fix" an electronically submitted return sent in by a client of mine before he took me on board. At least he had the foresight to print off the return before he pressed "send" so I could see all the mistakes he'd made.
Until your computer crashes.
It's just too ephemeral a method of retaining evidence - in my opinion. I have yet to come across a judge or magistrate who would be impressed if the "evidence" required was produced in the form of a CD or floppy disc.
And it's not just the form itself that should be retained anyway - it's all the underlying evidence - vouchers, invoices, statements, P60s, P45s etc.
There is plenty of life left in paper filing.
>> Edited by Eric Mc on Monday 6th September 16:33
It's just too ephemeral a method of retaining evidence - in my opinion. I have yet to come across a judge or magistrate who would be impressed if the "evidence" required was produced in the form of a CD or floppy disc.
And it's not just the form itself that should be retained anyway - it's all the underlying evidence - vouchers, invoices, statements, P60s, P45s etc.
There is plenty of life left in paper filing.
>> Edited by Eric Mc on Monday 6th September 16:33
I've just had a tax return form come through, about 4 days after a letter saying "We might, maybe have to send you a tax return sometime in the near future." 
Thing is, while I am starting a business, I haven't made anything out of it personally yet, and the job I do part-time is PAYE, so they know all about my income and they already have the tax I owe them. Can I just tell them there's no need to send it in? I know it's not that simple as I've just said it, but I really don't want to give them that much of my time and attention, the sherman tankers.
Thing is, while I am starting a business, I haven't made anything out of it personally yet, and the job I do part-time is PAYE, so they know all about my income and they already have the tax I owe them. Can I just tell them there's no need to send it in? I know it's not that simple as I've just said it, but I really don't want to give them that much of my time and attention, the sherman tankers.
Sorry D-Angle, once you start running a business you must start completing Self Assessment tax returns. The return will enable you to notify the Inland Revenue of the profit or loss you made in the relevant tax year - a legal obligation.
I presume the return they have sent to you is for 2003/04. This means you will need to prepare accounts covering the period from the commencement of your business activities up to the end of your business's accounting year ended on or before 5 April 2004. If you have made a trading profit, you will probably have a Self Assessent tax bill to pay on 31 January 2005. If you have made a trading loss, you will not have to pay any tax due to your business activities. In fact, you will have a number of choices available to you as to what you want to do with the trading loss you incurred - some of which could generate a tax refund for you.
Have you got an accountant on board yet?
>> Edited by Eric Mc on Monday 6th September 17:21
I presume the return they have sent to you is for 2003/04. This means you will need to prepare accounts covering the period from the commencement of your business activities up to the end of your business's accounting year ended on or before 5 April 2004. If you have made a trading profit, you will probably have a Self Assessent tax bill to pay on 31 January 2005. If you have made a trading loss, you will not have to pay any tax due to your business activities. In fact, you will have a number of choices available to you as to what you want to do with the trading loss you incurred - some of which could generate a tax refund for you.
Have you got an accountant on board yet?
>> Edited by Eric Mc on Monday 6th September 17:21
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