Common Self Assessment Myths Explained!

Anyone looking for advice on filing Self Assessment Tax Returns will, unfortunately, encounter just as many myths as they will genuine information. Of course, the best source of information is the advice of professionals. Nevertheless, we have prepared an article busting five common misconceptions that often lead people to make blunders and face penalties.

Myth 1: I Have not Heard from HMRC, So I Don’t Need to Submit My Tax Return.

Explained: It is your responsibility to check if and when you need to file your tax return. You need to register for Self Assessment and file a return if:

• You are newly self-employed with an income of above £1,000
• You earn less than £1,000 but choose to pay Class 2 National Insurance voluntarily to secure your State Pension and some benefits
• You join a business partnership as a new partner
• You receive any untaxed income of over £2,500.
• You receive Child Benefit payments while you or your partner earns more than £50,000, which requires paying the High-Income Child Benefit Charge.

If you wish to learn whether you need to file a return, you can visit GOV.UK, where you can also use a free online tool to check if you are required to file.

Myth 2: I Must Pay the Tax When I File My Return.

Explained: No. Even if you decide to submit your tax return today, you have until 31 January 2025 to pay any tax owed for the 2023/24 tax year.

Additionally, you could even consider setting up a Budget Payment Plan to spread the cost of your tax bill, making it easier to manage with weekly or monthly payments being made in advance.

Myth 3: I Don’t Owe Any Tax, So I Don’t Need to File a Return.

Explained: You might still be required to file a return, even if you don’t owe any tax. This is necessary if you are claiming a tax refund, seeking tax relief on business expenses, charitable donations, or pension contributions, or even if you are paying voluntary Class 2 National Insurance Contributions to protect your eligibility for some benefits and the State Pension.

Myth 4: HMRC Will Automatically Know If I No Longer Need to File Self Assessment.

Explained: You are required to inform HMRC if your circumstances have changed, and you no longer need to file a Self Assessment Tax Return. This is especially important if you have received a notice to file a Self Assessment Tax Return, because failing to provide the correct information will get hefty penalties levied on you.

Myth 5: HMRC Is Cracking Down on Online Sellers, So I Need to File a Return for Items I Have Sold.

Explained: If you have been selling personal items like old clothes online, there is no need to worry since the tax rules have not changed for them. You don’t need to file a Self-Assessment return or pay Income Tax on sales from clearing out your attic. HMRC provides clear guidance on selling online and paying taxes on GOV.UK.

Conclusion

It is crucial for taxpayers to stay adequately updated on rules and procedures related to Self Assessment Tax Returns. And it is even more important for them to seek out accurate and properly verified information when trying to stay updated.