Written exclusively for Expat Network by Mike Parks of  GoSimpleTax

What determines whether you need to complete a self assessment return.  With the deadline for submission on 31^st January** it is worth working out whether you need to submit a return.

Main types of self-employment

Typically, being self-employed relates to those who are a sole trader, part of a business partnership or director of a limited company. The latter two will definitely require a tax return to be completed.

If you’re a contractor using an umbrella company, it might not be necessary to file a Self Assessment as they are technically your employer. Those who are employed and undertake freelance work as an additional source of income are still classed as self-employed and will need to file a tax return.

Selling online

Those who carry out self-employed work as a sole trader will only need to submit the tax return if they earn more than £1,000. The same applies to those online sellers whose sales total exceeds this amount.

Even if you’re selling some possessions to earn extra cash, rather than build an online empire, you may be required to complete a Self Assessment and pay any tax owed on the income. There may even be Capital Gains Tax due if an item is not a car.

Renting out property

If you’re a landlord earning £2,500 to £9,999 (after allowable expenses have been deducted), you’ll be required to file a tax return. This requirement also takes other factors into account, such as additional income from employment or a pension. Potentially, small rental profits can avoid the Self Assessment and be handled by HMRC if they approve a request to adjust your PAYE code.

To work out your taxable rental profits, you first need to determine the type of renting. Rules differ for each situation: renting a room within your main property, letting a furnished holiday letting, and renting out foreign property or one in the UK whilst you live overseas.

Being a Minister of Religion

Even though Ministers of Religion are technically employed and paid via the payroll of the Church, they are required to submit a tax return. On top of this, there is an additional form (SA102M) specific to this role which will need to be filled out.

The Church will supply you with a P11D form at the close of every year – this details the taxable benefits and reimbursed expenses you’ve received. Those expenses paid for by the Church can’t be claimed on, but any paid by you have the potential to be offset.

Other circumstances

There are a few other situations that would require the submission of a tax return. These include income from savings and investment or if you earn foreign income.

Foreign income may also require you to complete the supplementary SA109 pages. There is specific criteria around this – you would be taxable on a remittance basis. You will also be taxable if you’re classed as a non-UK resident, not usually a UK resident, or have dual residence.

** 25/01/21 HMRC updated their guidance to state that they would not be issuing fines for late self-assessment tax return submissions until 28th February 2021. However, the deadline of 31st January remains for payments and any late payments will incur interest at 2.6%.

HMRC are urging customers to file their self-assessment as soon as they can – to avoid any last minute problems and to give people enough time to apply for the Time to Pay arrangement if they are going to struggle to pay their tax bill.

About GoSimpleTax

GoSimpleTax software submits directly to HMRC and is the solution for self-employed sole traders and anyone with income outside of PAYE to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Trial the software today for free – add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.