Remember October 5
Yvonne Graham, tax manager at Ensors Chartered Accountants, urges businesses to remember an important date
But what about October 5; why is that day memorable?
It is exactly six months after the end of the tax year, and is the last date on which you must tell HM Revenue and Customs (HMRC) if you had a new source of untaxed income or a capital gain in the last tax year.
If you have not received a tax return, it is easy to assume that you do not need to do anything, but it is not necessarily true.
HMRC will not know if you have a new source of income, and they need to be able to issue you with a tax return to collect the tax before it becomes payable, on the following January 31.
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The income to be reported might be rental from a let property, interest paid without any tax deducted (possibly from a National Savings investment) or income received from an investment abroad.
You do not need to tell HMRC about any earnings or pensions which are taxed under PAYE.
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But if your total income is high enough so that you are a higher rate taxpayer, you may be liable to pay additional tax on investment income, even if tax is deducted from that income, and again you should tell HMRC about this.
The state retirement pension is paid without tax deducted, but you will normally hear from HMRC about this in the months before it starts, because they will want to ensure that it is included as a deduction in your PAYE code.
Even if you do have some untaxed income, you might not have to complete a tax return – under some circumstances the tax can be collected through an adjustment to your PAYE Code.
But HMRC does need to be told about the income.
A word of warning - new businesses have a different deadline.
You must contact HMRC within three months of setting up, whether as self employed or trading through a limited company.
You may also have to think about registering for VAT, and if your business has employees, operating PAYE for them.
And finally, there is an automatic penalty for failing to notify HMRC within the time limit (unless there is a very good excuse), and interest will be charged on any tax paid late.
The maximum penalty is the amount of tax unpaid at January 31 following the tax year end.
This information is given by way of general guidance only, and no action should be taken solely on the basis of the information contained herein.
No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.