HMRC has published new guidance on self assessment tax returns, clarifying that company directors whose income is taxed at source under PAYE, who have no other tax obligations, do not need to complete a tax return.
HMRC has updated its guidance to clarify that anyone chargeable to income tax or Capital Gains Tax (CGT) must inform HMRC that this is the case if they have either:
- not received a notice to file a return; or
- received a notice to file a return and HMRC has agreed to withdraw the notice.
There are exclusions to this rule, including:
- individuals in receipt of a Simple Assessment (unless they are chargeable on anything that is not included in the assessment);
- individuals whose income has been taxed at source; and
- individuals not liable to the high income child benefit charge.
Many company directors are already taxed under PAYE separately, so will not need to notice of liability to tax, provided they have no other untaxed income. Previously, HMRC required that all company directors filed a tax return, irrespective of income.
HMRC can choose to issue a notice to file a self assessment return (under section 8 Taxes Management Act 1970) to any individual. Anyone receiving a notice to file a tax return must do so by the required deadline, or they may be liable to a late filing and/or a late payment penalty.
If an individual has received a notice to file and has no other taxable income to report, they can ask for the notice to file to be withdrawn. However, HMRC may decide that it still requires a return and if so, the return must be submitted, otherwise, penalties may be incurred.
You can check whether or not you need to file a tax return using HMRC’s online tool.
This publication has been prepared by Robinson Reed Layton LLP. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific tax advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.