Do you need to file a Self Assessment (SA) return for 2016/17?

Do you need to file a Self Assessment (SA) return for 2016/17?

Each January, millions of us rush to complete our tax returns to meet HMRC’s online filing deadline. This is set to change, with plans to reduce the number of taxpayers filing through Self Assessment, and to move to a fully digital tax system by 2020.

  • You can check if you need to file a 2016/17 tax return using HMRC’s online tool.

HMRC sends a Tax Return or a Notice to File online to everyone in the Self-Assessment system in April/May each year. If you receive this notice, you must file a return – ignoring this notice could result in a £100 fine. If you feel that you have been incorrectly issued a Tax Return or Notice to File, you can phone HMRC on 0300 200 3310 to discuss.

If you do not receive a Notice to File but feel that you should have done, you are obliged to notify HMRC of any tax liability by 5 October following the end of the tax year ending 5 April.

You need to file a return for 2016/17 if any of the following criteria applied to you between 6 April 2016 and 5 April 2017:

  • Your income (including benefits) was more than £100,000
  • You are liable for Capital Gains Tax or have incurred a Capital Loss (eg. from selling a second home)
  • You claimed more than £2,500 of expenses in employment
  • You received an income from a Trust or Estate where additional tax is due
  • You received an income as a non-resident landlord
  • You received taxable foreign income
  • You received income through self-employment or a partnership
  • You received unauthorised payment from a Pension Scheme liable to tax
  • You operated as a company director (e.g. as a consultant, contractor or freelancer through a personal service company) with a ‘live’ PAYE record (unless exempt eg. director of non-profit making organisation who receives no income)
  • Your income or your partner’s income was more than £50,000 and one of you claimed Child Benefit
  • You worked as a Religious Minister, Expatriate Employee, Lloyds Underwriter or MP

You may need to file a return if any of the following applied in the 2016/17 tax year:

  • Your property income was more than £2,500
  • Your savings or Investment income was more than £10,000 before tax
  • Your dividend income was more than £10,000 before tax
  • You received other untaxed income of more than £2,500

If your income was below the limits referred to, you may not be required to file a return.

What has changed for 2016/17?

£10,000 limit
A £10,000 Self Assessment limit for Dividends, Savings and Investment income was introduced for the 2016/17 tax year. Prior to April 2016, taxpayers only had to notify HMRC about dividend income where Higher (40%) or Additional (45%) rate tax was due.

Taxpayers leaving SA
From April 2016, taxpayers with the most straightforward accounts are no longer required to file under SA. Instead, HMRC will use the Simple Assessment mechanism to collect tax due in certain cases.

This applies to:

  • Pensioners who receive a State Pension that is more than their Personal Allowance and who have no PAYE sources of income*
  • PAYE taxpayers who are not within SA for any other reason, and receive a P800 Tax Calculation confirming a tax underpayment which cannot be collected via a PAYE Code amendment

*If you are being taken out of SA as a pensioner, you should receive a notification from HMRC.

What is ‘Simple Assessment’?

Simple Assessment is a new method used to collect tax from groups of people who have been removed from SA. It allows HMRC to assess a person’s tax liability using information they already hold.

HMRC are yet to provide full information about how the system will work. Due dates for Simple Assessment are likely to be inline with SA deadlines, and will include a 60 day window for appeals. More information is expected later this year when the first Simple Assessments are issued.

Fully digital by 2020

Going forward, more groups of taxpayers will be removed from Self Assessment as the government’s Making Tax Digital (MTD) scheme gets underway.

Announced in the March Budget 2015, Making Tax Digital is a key part of the government’s plans to “simplify” accounting and make it easier for individuals and businesses to get their tax right.

Under MTD, the Government plans to move to a fully digital tax system by the end of the 2020/21 tax year, meaning the end of the annual tax return for millions.

For more advice on Self Assessment, Simple Assessment, or any other tax and accounting matter, contact our team at Maitland Accountants on 01825 748308.