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Preparing for the UK tax self-assessment deadline

As the online UK self-assessment tax deadline of 31 January 2023 draws ever closer, now is the time to ensure that you are equipped to accurately prepare and submit your filing based on your unique needs and requirements. Here are some questions, answers and guidelines to help you manage your filing for His Majesty’s Revenue & Customs (HMRC) with ease.


Do you need to file a tax return?


The odds are - yes. While many believe this deadline is specific to self-employed workers there are other situations that become relevant for this tax deadline, as an example, whether or not you receive an income from abroad, from UK rental properties, or from investments which aren’t taxed at the source. Similarly, if you’ve profited off the sale of a UK property you will be liable for capital gains tax in the country, but more on that below.


How do you complete and submit a self-assessment tax return?


Before you can complete and submit your tax return, you'll need to have a unique taxpayer reference (UTR) and activation code from HMRC. If you want to submit your self-assessment tax return online, you’ll also have to set up a Government Gateway account which you can do at www.Gov.uk. Once you’ve set-up the account you will get an activation code in the mail, which will complete the set-up of your Gateway account.


The HMRC warns that the whole process could take up to 20 days, so be sure to not leave it until the last minute, especially if you are based abroad. Once you are successfully registered you’ll need to have the relevant financial information pertaining to your finances in the tax year, i.e. your annual accounts, invoices and expenses, plus details of investment profits, savings interest and pension contributions.


What if you are not a UK resident but own and rent out UK property?


If you earn more than £1,000 in rental income, you must complete a self-assessment tax return, regardless of whether you live in the UK or not. If you do not complete the self-assessment tax return, either the letting agent you appoint or the tenants in the property must withhold 20% tax at source from the rental income. According to UK domestic law (and international tax treaty law) the UK will have the first right to tax income from UK property, even if it is also subject to tax in another country.


As with every other self-employed individual, there’s a list of business expenses you can claim as a landlord to reduce your tax bill. They include property repair and general maintenance costs, running costs, council tax, water rates and electricity bills, accounting and management fees, costs of services, insurance, replacement of domestic items, mortgage interest and other finance charges.


What is capital gains tax?


Capital gains tax is, you guessed it, the tax on gains received when you sell or dispose of an asset like property. In very simple terms the total gain, or profit, is calculated by subtracting the sale value from the original purchase value. Before the 6th of April 2015 you were not taxed in the UK on gains made when you sold UK property if you were a non-UK resident for five consecutive UK tax years. Since that date however, if you’re a British expat who owns property in the UK, you have to pay capital gains tax if you sell your property for a gain.


The new tax applies on the sale of all UK residential property that’s defined as “property used or suitable for use as a dwelling.” This means it applies whether or not anyone is living in your property. In the UK, capital gains tax for residential property is charged at the rate of 28% where the total taxable gains and income are above the income tax basic rate band. Below that limit, the rate is 18%.


What are the penalties for late filing?


A £100 penalty fine will be levied if you are late in filing your tax return and paying your bill and this penalty will be increased if you are more than three months late. You will also have to pay interest on the money owed. HMRC might accept certain excuses if you want to appeal against a penalty for a late tax return, including the death of a close relative, illness, or a spell in hospital, but there is no guarantee they will accept it. Ensuring you are filing on time and correctly is imperative to avoid any penalties and late fees.


Speak to the experts


Tax season can prove to be overwhelming, and there can be consequences for making errors while submitting your self-assessment. For that reason it’s a good idea to consult with professionals to ensure your filing is up to date and accurate. Tailor My Property’s tax return services include access to our network of professionals and experts, and will ensure you’ll stay up to date with your financial and tax responsibilities. Get in touch today to speak to one of our consultants.


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