Rising interest rates coupled with frozen allowances and income tax thresholds will force more taxpayers to pay Income Tax on their savings. It might even push your total income over the basic rate threshold which will reduce your Personal Savings Allowance from £1,000 to £500, increase the rate of Capital Gains Tax (CGT) payable on capital gains realised and, if relevant, result in a repayment of any Child Benefit claimed.
Generally speaking, if you are employed or receive just pension income, Income Tax is automatically deducted through PAYE and any additional tax owed on savings income could be collected through your PAYE tax code. However, to ensure that HMRC are collecting the right amount of tax owed, it would be advisable to complete a tax return.
If you are
- Receiving income from savings, investments and dividends in excess of the Personal Savings Allowance and Dividend Allowance
- Undertaking self-employed freelance work to supplement your other income (as a sole trader or as a partner in a partnership) and this income exceeds £1,000 (before expenses)
- Receiving taxable income which exceeds £100,000
- Renting out property
- Receiving foreign income
Check if you need to file a Tax Return for the year ended 5 April 2023 here ( https://www.gov.uk/check-if-you-need-tax-return). If you need to file, please register for Self-Assessment by 5 October 2023 here ( https://www.gov.uk/self-assessment-tax-returns/sending-return) to avoid a fine. You’ll need a Government Gateway user ID and password to to action this. Once completed, you’ll receive a unique taxpayer reference number in the post (UTR) from HMRC.
It is advisable to file your tax return online – it’s quicker, it won’t get lost in the post and your tax bill is calculated automatically. The online filing deadline for 2022/23 is 31 January 2024 and you should pay the tax owed on the same date to avoid late filing penalties and interest charges.
Once registered for self-assessment, your UTR should arrive 2-3 weeks thereafter. Take this time to collate all the necessary paperwork required to complete your tax return – please don’t leave it to the last minute!
Self-Assessment is complicated. If all this is too baffling, please don’t struggle alone – call one of our private client tax specialists at CKLG on 01223 810100 for friendly help and support.
