I am a full-time employee, do I still have to fill in Self-Assessment tax return
If you’re an employee earning income through the PAYE (Pay As You Earn) system, you may wonder whether you need to go through the process of filing a self assessment tax return. Let’s delve into the details and shed light on the key aspects surrounding tax returns for PAYE workers.
Understanding PAYE
The PAYE system is the method by which most employees in the United Kingdom pay their income tax and National Insurance contributions. Under this system, employers deduct income tax and National Insurance contributions from employees’ salaries before paying them. As a result, most individuals who earn income solely through PAYE do not need to complete a tax return.
When might you need to do a tax return if you are PAYE?
There are circumstances in which you may still need to complete a tax return, even if you are a PAYE employee. Note that any employee with over £100k salary should do a tax return. Other circumstances often involve additional income streams, specific deductions, or certain financial situations that fall outside the scope of the PAYE system. Let’s explore these situations in more detail:
- Home Working Allowance: If it’s part of your contract or you have an agreement with your employer that you can work from home, you can actually claim home working allowance. This expense would be declared in a self assessment tax return.
- Mileage allowance: If the mileage allowance that you employer pays is less than the HMRC rate you can claim the balance through a self assessment tax return.
- Capital Gains Tax: If you have sold assets such as property or investments and made a profit, you may be liable to pay Capital Gains Tax. In such cases, you would need to complete a tax return to report these capital gains.
- Claiming Tax Relief: If you are eligible for certain tax reliefs or deductions, such as claiming back expenses that your employer does not reimburse, you may need to complete a tax return to ensure you receive the appropriate tax relief.
- Foreign Income: If you earn income from overseas sources, such as rental properties or investments, or if you have foreign savings accounts, you will likely need to include this income in your tax return.
- Rent-a-Room Scheme: If you participate in the Rent-a-Room Scheme and earn rental income from letting out a furnished room in your home, you will need to complete a tax return if the income exceeds the scheme’s threshold.
- Pension Contributions: If you are a higher rate taxpayer or have made contributions to a pension scheme that is not operated through your employer’s payroll, you may need to complete a tax return to claim the appropriate tax relief.
- Charitable donations: If you are a higher rate taxpayer, and if you have made gift aided charitable donations, again you may need to complete a tax return claim tax relief on them.
- Untaxed or Additional Income: If you have any untaxed income, such as income from self-employment, freelance work or property rental, you may need to declare it on a tax return.
- Selling a property: If you sell a property at a loss, it may still be necessary to submit a return to capture the loss to use against future years’ gains.
If you’re uncertain about whether you need to complete a tax return or how to handle specific tax situations, contact Passman Leonard for personal income tax advice.
Completing a Tax Return
To complete and submit a tax return, you need to prepare the form on an online system and submit it electronically to HM Revenue & Customs (HMRC). The tax year in the UK runs from April 6th to April 5th the following year, and the deadline for submitting a tax return online is usually January 31st after the end of the tax year.
It’s essential to keep accurate records of your income and expenses throughout the year to make the tax return process smoother. This includes documents such as P60s, P45s, bank statements, rental income records, and receipts for deductible expenses. Having these documents readily available will make the tax return process smoother and more accurate.
When completing your tax return, ensure you provide accurate information, including your PAYE income, any additional income, deductions, and other relevant details. HMRC will use this information to calculate your tax liability or determine if you are entitled to a tax refund.
As a PAYE employee, ensure that your tax code is correct and up to date. Mistakes in tax coding can result in overpayment or underpayment of tax. Regularly review your pay slips and HMRC correspondence to verify that your tax code accurately reflects your circumstances.
Let us help you with your tax affairs
Being a PAYE employee generally exempts you from the need to file a tax return. However, certain circumstances may require you to complete a tax return. Familiarising yourself with these situations and consulting with a tax professional can help ensure compliance with tax regulations and prevent any potential penalties for not paying tax or missed opportunities to claim tax relief.
Are you feeling stressed and anxious about managing your tax affairs and dealing with HM Revenue and Customs? Entrust your tax matters to a dedicated personal tax advisor for self assessment tax return advice here at Passman Leonard. Located in London, our services cater primarily to local clients, but we also provide tax advice and planning assistance nationwide.
If you have any further questions about whether Should you do a tax return if you are PAYE, get in touch today via email info@passmanleonard.co.uk or call on 01895 434515.
