Notification of chargeability to income tax and capital gains tax

Produced by Tolley
Notification of chargeability to income tax and capital gains tax

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Notification of chargeability to income tax and capital gains tax
  • Self assessment regime
  • Taxpayers who complete a tax return every year
  • Removing a client from the self assessment regime
  • Taxpayers who have tax to pay but have not been issued with a tax return
  • Interaction with capital gains tax UK property disposals compliance regime
  • Interaction with simple assessments
  • Interaction with overpaid coronavirus support payments
  • Late notification penalties
  • Reasonable excuse
  • More...

Self assessment regime

The majority of the taxpayers in the UK do not need to complete a self assessment tax return as they are primarily employees whose tax is deducted at source by their employers under the pay as you earn system (PAYE). Similarly, most taxpayers receiving investment income will not need to file a tax return if this income is within the savings nil rate band or the dividend nil rate band. See the Taxation of savings income and Taxation of dividend income guidance notes.

Whether the taxpayer needs to complete a tax return or not will depend on his circumstances. The following list of those whom HMRC suggests should submit tax returns is compiled by updating the archived HMRC guidance together with the information available on the GOV.UK website:

  1. the self-employed (either sole traders or those in partnership) earning more than £1,000 in the tax year [note that for the 2020/21 tax year this includes amounts received through the self-employment income support scheme and any money received through other taxable coronavirus (COVID-19) grants, see the Taxation of coronavirus (COVID-19) support payments guidance note]

  2. a company director (unless the taxpayer is a director of a non-profit organisation, for example a charity, and does not receive any payments or benefits). Note that HMRC updated its guidance in December 2018, in order to make it clear that company directors do not need to file a tax return if all their income is taxed at source and they do not otherwise need to file a return (eg to claim a relief)

  3. a minister of religion (any faith)

  4. a name or member of Lloyd’s

  5. those receiving untaxed income, such as:

    1. income from savings and investments on which tax is due

    2. income from property on which tax is due

    3. annual trust or settlement income on which tax is still due (even if the taxpayer is only treated as receiving this income)

    4. income from the estate of a deceased person on

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