TAX RETURNS

SELF ASSESSMENT

The tax year is from 6 April to 5 April following year.

You have to send a Self Assessment tax return if in the last tax year:

  • you were self-employed – you can deduct allowable expenses
  • you got £2,500 or more in untaxed income, eg from renting out a property or savings and investments
  • your savings or investment income was £10,000 or more before tax
  • you made profits from selling items like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
  • you were a company director – unless it was for a non-profit organization and you didn’t get any pay or benefits, like a company car
  • your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
  • you had income from abroad that you needed to pay tax on
  • you lived abroad and had a UK income
  • you got dividends from shares and you’re a higher or additional rate taxpayer
  • your income was over £100,000
  • you were a trustee of a trust or registered pension scheme
  • you were a religious minister or Lloyd’s underwriter

RECORD KEEPING

To be able to complete the tax return you will need all your business records. Keeping them is a legal obligation – especially if you subjected to tax compliance checks – with the following rules:

Sole Traders 5 years after the 31 January submission deadline of the relevant tax year
Partnerships 4 years after the 31 January submission deadline of the relevant tax year
Individuals 22 months after the end of the tax year

OptiAccounts can help you with >>digitalizing, physically and digitally store your records<<.

INCOME

Your return will have to include all income from every source that you have to pay tax after remember if you are self-employed that does not mean you can’t have a job as a PAYE employee:

  • money you earn from employment
  • profits you make if you’re self-employed
  • some state benefits
  • most pensions, including state pensions, company and personal pensions and retirement annuities
  • interest on savings and pensioner bonds
  • rental income (unless you’re a live-in landlord and get £4,250 or less)
  • benefits you get from your job
  • income from a trust
  • dividends from company shares

There are some exceptions

  • income from tax-exempt accounts eg. Individual Savings Accounts (ISAs) and National Savings Certificates
  • some state benefits
  • premium bond or National Lottery wins
  • the first £4,250 of rent you get from a lodger in your home

TAX RATES

Income tax bands of taxable income (£ per year)

Tax year 2016-17 Tax year 2017-18
Basic rate £0-32,000 £0-33,500
Higher rate £32,001-150,000 £33,500-150,000
Additional rate Over £150,000 Over £150,000

Income tax rates – 2016-17

Tax year 2016-17
Main rates
Basic rate 20%
Higher rate 40%
Additional rate 45%
Dividend rates
Dividend ordinary rate – for dividends otherwise taxable at the basic rate 7.5%
Dividend upper rate – for dividends otherwise taxable at the higher rate 32.5%
Dividend additional rate – for dividends otherwise taxable at the additional rate 38.1%

Income tax rates – 2017-18

Main rates
Basic rate 20%
Higher rate 40%
Additional rate 45%
Savings rates
Starting rate for savings 0%
Savings basic rate 20%
Savings higher rate 40%
Savings additional rate 45%
Dividend rates
Dividend ordinary rate – for dividends otherwise taxable at the basic rate 7.5%
Dividend upper rate – for dividends otherwise taxable at the higher rate 32.5%
Dividend additional rate – for dividends otherwise taxable at the additional rate 38.1%
Default rates
Default basic rate 20%
Default higher rate 40%
Default additional rate 45%

 Starting rates for savings income

Tax year 2016-17 Tax year 2017-18
Starting rate for savings 0% 0%
Starting rate limit for savings £5,000 £5,000

Special rates for trustees’ income

Tax year 2016-17 Tax year 2017-18
Standard rate on first £1,000 of income which would otherwise be taxable at the special rates for trustees Up to 20%, depends on the type of income Up to 20%, depends on the type of income
Trust rate 45% 45%
Dividend trust rate 38.1% 38.1%

Income tax allowances

Tax year 2016-17 Tax year 2017-18
Personal allowance
Personal allowance £11,000 £11,500
Income limit for personal allowance £100,000 £100,000
Income limit for Married couple’s allowance £27,700 £28,000
Marriage allowance
Marriage allowance £1,100 £1,150
Married couple’s allowance for those born before 6 April 1935
Maximum amount of married couple’s allowance £8,355 £8,445
Minimum amount of married couple’s allowance £3,220 £3,260
Blind person’s allowance
Blind person’s allowance £2,290 £2,320
Dividend allowance
Dividend allowance £5,000 £5,000
Personal savings allowance
Personal savings allowance for basic rate taxpayers £1,000 £1,000
Personal savings allowance for higher rate taxpayers £500 £500

HELP

If you decide that you would like to ask OptiAccounts to help you with Self Assessment please do not hesitate to >>contact<< the office.

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