HMRC has busted some myths (Image: PA)
Taxpayers are being urged to register for Self Assessment by October 5, 2024, for the first time if they need to file a return for the tax year 2023 to 2024, HM Revenue and Customs (HMRC) has announced. With the January 31, 2025, deadline looming, HMRC is keen to dispel “plenty of myths about who needs to file a Self Assessment return” and has set out to clarify some widespread misconceptions.
Busting Self Assessment ‘myths’ with HMRC
Myth 1: “HMRC hasn’t been in touch, so I don’t need to file a tax return.”
The truth is that individuals must assess for themselves whether they need to file a tax return for the 2023 to 2024 tax year. There’s a range of circumstances that might necessitate registering for Self Assessment and submitting a return, such as:
- are newly self-employed and have earned gross income over £1,000
- earned below £1,000 and wish to pay Class 2 National Insurance Contributions voluntarily to protect their entitlement to State Pension and certain benefits
- are a new partner in a business partnership
- have received any untaxed income over £2,500
- receive Child Benefit payments and need to pay the High Income Child Benefit Charge because they or their partner earned more than £50,000
For further details, GOV.UK is the place to go, and those uncertain about their need to file can utilise the free online checker on GOV.UK, reports Leicestershire Live.
Upon registering for Self Assessment, taxpayers will receive their Unique Taxpayer Reference, essential for filing their return and settling any tax owed. If you’ve registered for Self Assessment in the past but didn’t file last year, remember to reactivate your account.
Myth 2: “I have to pay the tax at the same time as filing my return.”
Contrary to popular belief, even if someone files their return today, the deadline for customers to pay any tax owed for the 2023 to 2024 tax year is 31 January 2025. Customers may also be able to set up a Budget Payment Plan to help spread the cost of their next Self Assessment tax bill, by making weekly or monthly direct debit payments towards it in advance.
Myth 3: “I don’t owe any tax, so I don’t need to file a return.”
The truth is, even if a customer doesn’t owe tax, they may still need to file a Self Assessment return to claim a tax refund, claim tax relief on business expenses, charitable donations, pension contributions, or to pay voluntary Class 2 National Insurance Contributions to protect their entitlement to certain benefits and the State Pension.
Myth 4: “HMRC will take me out of Self Assessment if I no longer need to file a return.”
In reality, it is important customers tell us they’ve either stopped being self-employed or they don’t need to fill in a return, particularly if they have received a notice to file. If they don’t, HMRC will keep writing to them to remind them to file their return and we may charge a penalty.
Customers may be exempt from filing a tax return if they’ve ceased renting out property, are no longer subject to the High Income Child Benefit Charge, or their income has fallen below the £150,000 threshold without any other reasons to file. HMRC advises those who believe they’re no longer required to complete a tax return for the 2023 to 2024 tax year to inform them online promptly when their situation changes.
To assist in the process, customers can view HMRC’s YouTube tutorials on stopping Self Assessment.
Myth 5: “HMRC has launched a crackdown on people selling their possessions online and now I’ll have to file a Self Assessment return and pay tax on the items I sold after clearing out the attic.”
The truth is that despite rumours earlier this year, there have been no alterations to the tax rules in this context. Individuals who have offloaded old clothes, books, CDs, and other personal belongings via online marketplaces aren’t obliged to submit a Self Assessment or pay Income Tax on these sales.
For guidance on online sales and tax obligations, one can refer to HMRC’s information available on GOV. UK.
Myrtle Lloyd, HMRC’s director general for customer services , said: “We want to make sure you are clear about your tax responsibilities. These myth busters and our range of resources on GOV.UK can help if you are unsure if Self Assessment applies to you or think you no longer need to file a tax return. Just search ‘Self Assessment’ on GOV.UK to find out more.”
HMRC has stated that it offers “a wide range of resources to help customers register for Self Assessment”, including YouTube video tutorials and guidance on GOV. UK.
The tax authority is encouraging customers to file their returns early “to provide peace of mind and to also allow time to consider opportunities to spread the cost of their tax bill, claim refunds earlier and avoid costly errors caused by rushing”.
It’s crucial for customers to maintain accurate records for their tax return, as HMRC may request these documents if they decide to check the return. Penalties could be issued if records are not accurate, complete and readable.
Self-employed individuals must also keep track of their business income and expenses, and ensure they’re registered with HMRC as self-employed. More details can be found on GOV.
UK. People are advised to be wary of potential scams and never share their HMRC login information with anyone, even a tax agent if they have one.
HMRC’s advice on scams can also be found on GOV. UK.
