How to File Your Personal Taxes in the UK – A Comprehensive Guide

Whether you’re a resident or a non-resident taxpayer, understanding how to fiile your personal taxes is of utmost importance. Learn how to file your personal taxes in the…
by Yuki Shrestha
July 26, 2023
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Whether you’re a resident or a non-resident taxpayer, understanding how to fiile your personal taxes is of utmost importance. Learn how to file your personal taxes in the UK with our comprehensive guide.

From understanding tax deadlines to claiming relief, we’ve got you covered. We will explore the key aspects of personal taxes in the UK, equipping you with the knowledge to navigate the tax system with confidence.

Understanding Personal Taxes in the UK

Knowing about personal taxes in the UK is crucial for individuals to fulfil their legal obligations and make informed financial decisions. Personal taxes, also known as income taxes, are payments made by individuals to the government based on their income and other taxable factors.

HM Revenue and Customs (HMRC) is responsible for collecting and enforcing these taxes. By knowing who needs to pay taxes, preparing the necessary documents, and filing accurately, individuals can navigate the UK tax system effectively and ensure compliance with tax laws.

Who Needs to File a Personal Tax Return in the UK?

One should submit a tax return for a particular tax year if one:

  • Earned over £1,000 from sole trading business
  • Is a partner in a business partnership.
  • Earned more than £100,000
  • Has other untaxed income like rental income, tips/commissions, savings income etc. receives COVID-19 grants or support payments or has foreign income
Personal Tax by a man

Step-by-Step Guide to Filing Your Personal Taxes

Filing your personal taxes in the UK involves a step-by-step process to ensure accuracy and compliance with tax laws. Here is a guide to help you navigate the process:

1.     Determine Your Tax Residency Status:

Before proceeding with tax filing, determine your tax residency status in the UK. This status will determine your tax obligations and the applicable tax rates. Generally, you are considered a resident if you spend 183 days or more in the UK during a tax year or have a permanent home in the country. Statutory Residence Tests would need to be referred to determine the tax residency status.

2.     Register for Self-Assessment:

If you are required to file a tax return, you need to register for self-assessment with HM Revenue and Customs (HMRC) and HMRC will issue a Unique Tax Reference (UTR) Number to file the self-assessment. You can register online through the HMRC website or by calling the Self-Assessment Helpline. It’s important to register as soon as possible to ensure you have ample time to complete your tax return before the deadline.

3.     Gather the Necessary Documents:

Collect all the relevant documents and information needed to complete your tax return. This includes your P60 form, which your employer provides, detailing your income and taxes paid during the tax year. Additionally, gather records of any other income sources, such as self-employment, rental properties income and expenses, interest statements, dividend vouchers or capital gains on disposal of assets. Keep track of any allowable deductions or expenses to ensure accurate reporting.

4.     Complete Your Tax Return:

Once you have all the necessary documents, you can proceed with completing your tax return. HMRC provides an online platform called “Self-Assessment Online” that guides you through the process. Alternatively, you can fill out a paper tax return and send it to HMRC.

When completing the tax forms, it is important to accurately fill in the various sections pertaining to your income sources, including employment, self-employment, capital gains, rental income, furnished holiday lettings (FHL), and claim any applicable reliefs.

Taxpayers must provide the correct information regarding their residence status and make any necessary claims for remittance basis, ensuring that the details align with their specific circumstances.

5.     Calculate Your Tax Liability:

After completing your tax return, HMRC will calculate your tax liability based on the information provided. They will send you a tax calculation (also known as a “tax calculation summary”) outlining the amount you owe or any refund due. Review the calculation carefully and make sure you understand how the amount is determined.

Calculate your Tax liability

6.     Make Payment or Claim Refund:

If you owe tax, make the payment by the due date to avoid penalties and interest charges. HMRC provides various payment methods, including online bank transfer or debit/credit card. If you are due a refund, HMRC will issue the refund according to the payment details you provided during the filing process.

7.     Keep Accurate Records:

Maintain organised records of your tax returns, supporting documents, and receipts for at least six years. This will help you in case of any inquiries from HMRC or if you need to refer to past tax information. Accurate record-keeping is crucial for ensuring compliance and facilitating any future tax-related matters.

Understanding Personal Tax Deadlines

The deadlines for submitting self-assessment tax returns in the UK differ based on the method of submission. Please note the following important dates:

  • For paper filing, the deadline is typically the 31st of October following the end of the tax year. For example, if the tax year ends on the 5th of April 2023, the paper filing deadline would be the 31st of October 2023.
  • If you choose to file your tax return online, you have an extended deadline of the 31st of January of the subsequent year. Using the same example, the online filing deadline would be the 31st of January 2024.

Note: The deadline for amendment for the self-assessment return is 12 months of the Self Assessment deadline. This can be done either online through the HMRC website or by submitting another paper return.

It’s crucial to adhere to these deadlines to avoid late filing penalties and ensure compliance with HM Revenue and Customs (HMRC) regulations. Make sure to plan your tax preparations accordingly and submit your tax return by the appropriate deadline.

Claiming Tax Relief for Personal Taxes in UK

There are various types of tax relief available in the UK. Common categories include

  • Personal Allowance: This is the amount of income you can earn before you start paying income tax. It is automatically applied, and most individuals are eligible for it.
  • Marriage Allowance: If you are married or in a civil partnership, and one spouse earns less than the personal allowance, the unused portion can be transferred to the other spouse, reducing their tax liability. However, this is only possible if both the spouses are basic rate taxpayers.
  • Pension Contributions: Contributions made to registered pension schemes are eligible for tax relief. The amount of gross pension contribution extends the basic rate tax band and higher rate tax band. By making gross pension contributions, individuals can shift a greater portion of their income into the basic rate tax band, where it is taxed at a lower rate of 20%. As a result, more income is taxed at 20% rather than at the higher rates of 40% or 45%.
  • Charitable Donations: Donations made to registered charities can be eligible for tax relief through schemes like Gift Aid. This allows the charity to reclaim the basic rate of income tax on the donation, increasing its value. The amount of gross donation extends the basic rate tax band and higher rate tax band like pension contributions relief.

The process for claiming tax relief depends on the type of relief. Some reliefs, such as the personal allowance and marriage allowance, are automatically applied when you file your tax return. For other reliefs, such as pension contributions or charitable donations, you may need to provide additional information or claim them separately on your tax return.

Summary

Remember, this guide provides a general overview, but individual circumstances may vary. If you have complex tax situations or are unsure about any aspect of filing your personal taxes, consider seeking professional advice from a tax accountant or consulting the HMRC website for further guidance.

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