SELF ASSESSMENT TAX RETURNS
From Applegate Accountants, Cheshire

The self assessment tax return is a document used by HMRC to collect information about an individual’s income and capital gains. It is not sent out to every taxpayer – those who have uncomplicated income may never receive the form. This is because the mechanisms of Pay-As-You-Earn and other deductions of tax at source often deal with these situations.

The current tax return operates under the ‘self assessment’ system, whereby an individual declares his or her income and gains, and has the opinion of calculating his or her own tax. The self assessment tax return therefore has the purpose of both itemising the income, and recording the amount of tax due.

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Structure of the self assessment tax return

Because different individuals have different circumstances, the standard tax return is divided into two parts.

The first part is sent to every recipient of the standard tax return, and is therefore common to all these returns. It requests general information, as well as details of the following:

Income for UK savings and investments
Income from pensions and social security benefits
Relief’s claimed for various expenditure
Specific allowances claimed
The income tax due

The second part of the tax return consists of a series of supplementary pages that are only sent to relevant taxpayers. The main supplementary pages are as follows:

Employment income
Self employment income
Partnership income
Income from land & property
Capital gains (profits made on selling assets)

Timing of the self assessment tax return

Self Assessment Tax Returns Relevant taxpayers in Cheshire or elsewhere are sent forms during April that relate to the tax year that has just ended (eg the 2006/07 forms are sent out in April 2007). The taxpayer has two options:

Return the form by the following September and let HMRC calculate the tax.

Calculate the tax themselves (or instruct an accountant to do it) and return the form by the next 31st January (ie the next year)

An online version of the tax return can also be completed and submitted electronically as an alternative to the traditional paper based version.

New simplified Tax Return

Some of the individuals who have traditionally received self-assessment tax returns as described above, have fairly straightforward tax affairs. For these individuals a new simplified tax return is available. This return is only four pages long and is designed so that an automated data capture system can be used.

It is intended that those using the new form will submit it before the 30th September following the end of the tax year so that HMRC will calculate the tax.

Exempt Income

Exempt income is outside the scope of income tax. Exempt income will not have had tax deducted from its source, and it should not appear anywhere in the income tax computation. The following items are exempt from tax:-

Prizes are generally exempt, such as Premium Bond prizes, Lottery Prizes and betting winnings (unless a professional gambler)

Income from PEPs, TESSAs and ISAs are all specifically exempt. These are all forms of investment that have been designed by the government to encourage saving and investment by exempting the income from tax.

SELF ASSESSMENT TAX RETURNS From Applegate Accountants, Cheshire

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SELF ASSESSMENT TAX RETURNS
From Applegate Accountants, Cheshire