Who needs to complete self-assessment - October 18th 2024

HMRC’s deadline for registering your need to complete a self-assessment tax return for the first time was 5 October for tax year 2023/24. There are a number of common myths about who needs to complete a return which HMRC has been seeking to dispel so the increasing numbers of first time filers don’t get caught out.

I haven’t been notified

It is the taxpayer’s responsibility to determine if a tax return is required, so claiming lack of awareness is no defence. There are numerous reasons why you might need to register for self-assessment, including:

• You have a new source of income, such as becoming self-employed, being taken on as a partner in a partnership, or letting out a property for the first time; or
• You might need to pay capital gains tax (CGT) or the high-income child benefit charge (HICBC).

If you have missed the 5 October notification deadline, you can usually avoid a penalty provided you submit a tax return and pay any tax due for 2023/24 by midnight 31 January 2025.

Paying tax

Another fallacy is that tax has to be paid at the same time as the tax return is filed. This is not far from the truth when it comes to CGT on the disposal of a residential property, but it is not the case for income tax and NIC. Tax is not payable until 31 January 2025 for 2023/24. This is regardless of when the tax return is submitted, which could have been at any point from 6 April 2024 onwards.

No tax due

Even if you don’t have a tax liability or a requirement to file a tax return, you might still want to submit one. For example, you might be due a tax refund, or if you’re self-employed you choose to pay class 2 NICs on a voluntary basis to avoid a gap in your NIC record.

Leaving self-assessment

You may think that HMRC will take you out of self-assessment if you no longer need to file a return. However, it is your responsibility to let HMRC know if a tax return is not required. If your circumstances change, there is likely to be an impact on your tax status. For example, if you have ceased self-employment, are no longer a partner, or have stopped renting out property.

If you have received a notice to file a return it is particularly important that you inform HMRC of your new status since you could end up being charged a penalty for non-submission. Changes can be reported to HMRC online using your Government Gateway.

Attic clear out

You will not normally have to complete a tax return just because you have sold some personal possessions online. There is a big difference between:

• selling some unwanted items, such as the contents of a loft or garage, when it is unlikely that any tax is payable; and
• buying goods for resale, or making goods with the intention of selling them for a profit, when you are likely to have to pay tax on the profits made from trading.

However, even where there is a trading activity, no tax will be due if income is £1,000 or less for the tax year.

Side hustles

New online platform reporting rules will mean that HMRC will have access to information from online marketplaces.

• Digital platforms have been collecting seller information and income since January 2024 which will be reported to HMRC by January 2025. 
• Anyone who is selling goods or services online, and has not registered for self-assessment, should therefore review their tax reporting requirements with some urgency.

Reporting will be based on the calendar year – rather than tax year – which could also cause some confusion, on top of which platforms are likely to have different reporting methods.