Self Assessment or PAYE?

Tax return season in the UK can get confusing for some, especially if you’re an expat in the UK. Do you submit a Self Assessment tax return or a PAYE (Pay As You Earn) tax return, or both?

If you have a job where your employer deducts PAYE and National Insurance (NI) tax from your salary, it’s unlikely that you’ll need to submit a tax return. If your financial issues are more complicated than just simple deductions, then it’s likely you need to submit a Self Assessment tax return. Most people don’t need to submit one, but there are nine million people in the UK who, by law, need to submit a Self Assessment tax return.

Take this basic quiz to see if you need to submit a Self Assessment tax return:

If you can answer yes to any of the below, you’ll need to submit a Self Assessment tax return.

– You’re self-employed

– You’re a company director

– You receive a total income of £100,000 or more

– You’re a trustee

– You receive foreign income

– You’re a minister of religion

– You pay Capital Gains Tax

– You or your partner receive Child Benefit and your income is over £50,000

– You have lived or worked abroad (or you live outside the UK)

– You receive an untaxed income due to savings or property

– You need to claim expenses and reliefs

– You get income from trusts, settlements and estates

– You’re employed, but you want to claim work expenses or professional subscriptions of more than £2,500

If you answered no to all of the above, then you can submit a PAYE tax return. To receive a tax number or UTR (Unique Tax Reference), you need to first register with HMRC.

Some more info on Self Assessment tax returns

Usually, you will receive a letter from HMRC around April or May saying that you need to send a tax return. But if you feel that you don’t need to submit one, you can contact HMRC or a registered tax agency to discuss.

When submitting a Self Assessment return, you need all your records of income and expenses for the year you are claiming for. This evidence needs to be kept for five years. If you don’t have hard copies of this information, it can be presented digitally.

The deadline for a paper submission of the above is 31 October. The deadline for submitting this online is 31 January. If you miss the paper deadline, you have a second chance.

Some more info on PAYE tax returns

A PAYE tax return isn’t mandatory, but it’s a great opportunity to claim back any overpaid tax. HMRC will issue you a tax code based on the information they have on your income and entitlement to allowances. You can find your code on your PAYE Coding Notice, your P45, or on your payslip.

When submitting a PAYE tax return, you need all the evidence of your income and tax payments for the year you’re filing for. This can be done in the form of a P60, P45 or statement of earnings.

You can file your PAYE from 6 April of each year. And the good news is, you’re able to claim back for up to four years. However, if you’re leaving the UK and don’t intend working again, you can claim before April of the following year.

There are millions of pounds that go unclaimed every year, and one in three people living in the UK are due a refund. So let your refund do the talking.

*John Dunn is the manager of 1st Contact Tax Refunds – an ICAEW-registered accounting business. If you would like assistance with your Self Assessment tax return, or want to find out if you’re due a tax refund, visit 1st Contact Tax Refunds to find out what services they offer. 

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