Self-assessment tax returns deadline

If you are self-employed, a higher-income earner or have multiple sources of income, then you need to file a self-assessment tax return for year ended 5th April 2014 online by 31 January 2015.



For those who are not registered for online filing, the deadline for filing manual self-assessment forms passed on 30th October 2014. However, it is not too late to avoid a late filing penalty if you can register now. It would normally take HMRC 2-3 weeks to issue a UTR (Unique Tax Reference) and for you to then register in for online filing.



You can still make the 31st January 2015 deadline !



If you need help and/or advice contact me.

Tax on your UK income if you live abroad

There are people that believe that if they live outside the UK they don't need to declare income to HMRC. If you have income derived from within the UK then it must be declared and any taxes dues must be paid. Here are a few examples of the types of income:

• pension 
• rental income
• savings interest 
• wages

You pay Income Tax on income above your tax-free limit (‘Personal Allowance’), if you’re eligible for it, eg you have a British passport.

The country where you live might tax you on your UK income. If it has a ‘double-taxation agreement’ with the UK, you can claim tax relief in the UK to avoid being taxed twice.

When tax isn’t due or is already deducted 

• the State Pension 
• interest from UK government securities (‘gilts’) 

If you live abroad and are employed in the UK, your tax is calculated automatically on the days you work in the UK.

Tax on your savings interest is deducted by your bank or building society unless you give them form R105. 

When to report your income to HMRC

• you rent out property in the UK 
• you work for yourself in the UK 
• you have a pension outside the UK and you were UK resident in one of the 5 previous tax years 
• you have other untaxed income You don’t need to report your income to HMRC if you’ve already claimed tax relief under a ‘double-taxation agreement’.

Sending a Self Assessment tax return

• send your tax return by post
• use software 
• get help from a professional, eg an accountant 

Fill in the ‘residence’ section (form SA109 if you’re sending it by post) to tell HMRC you’re non-resident. Fill in any sections relating to your type of income.

You’ll be fined if you miss the deadline - it’s earlier if you’re sending your return by post (31 October).

If you’ve overpaid
Apply for a refund if you think you’ve paid too much tax. This might happen if tax is deducted automatically (eg by your bank) but your total UK income is below your Personal Allowance.

Send form R43 to HMRC, or claim the refund in your Self Assessment tax return if you’re already doing one.

Double taxation - are you paying too much tax ?

Are you being taxed twice ? I had two recent cases where individuals were being taxed twice, in the UK and Norway.

There are many double-tax treaties between the UK and other countries, both inside and outside the EU. These are in place to stop individuals and companies being taxed twice for working and operating in a different country and their home country. This can especially adversely affect individuals who do not know that there are such treaties and do not have access to information to help them. There are also agreements in place in respect of National/Social Insurance. Even less is know by individuals about these.

Most responsible employers do try to help their employees but what about the self-employed, contractors and small businesses who do not have accountants to hand to research and give advice and assistance ?

Overseas workers should check with their employers to be sure they are being taxed correctly or consult an independent professional.

Self-Assessment tax returns & Child Benefits

Those earning over £50,000 per year and claiming Child Benefits must now declare these benefits through the Self-Assessment tax return process. Failure to do so could result in a penalty.

High income earners must register by 5 October 2013 to avoid a penalty.

HMRC has added the Child Benefit declaration to the self-assessment tax return process but it seems that it has not been widely advertised. High income earners who are employed under PAYE schemes and who may not have filed self-assessment tax returns before may not be aware or prepared for this.

If you are in this category then you must call the HMRC helpline as soon as possible and request a Unique Tax Reference (UTR). It will take HMRC up to two weeks to issue the UTR so this should be done immediately.

The myth about the 75% income rule in Norway

Much is touted about the rules surrounding how much income a contractor declares through a UK Limited company as salary earned in Norway. The most common one I come across is the 'rule' that you must declare 75% of income as salary in Norway and pay related taxes there.

Norwegian law requires that 75% of profit (not gross income) earned by a Ltd company should (not must) be distributed as salary. You can offset your Norwegian costs against Norwegian income and pay the payroll taxes on 75% of the net. Therefore, if your costs equate to 10% of gross income then you will be able to reduce your taxes to payment on 65% of gross income.

In addition:

1. Your UK Ltd company can make an application for exemption from Norwegian Social Insurance.
2. As a foreign employee of a foreign company operating in Norway, you will be eligible for the 10% standard tax relief.
3. If you work offshore, aboard a vessel for 130 days or more then you may be eligible for the Norwegian seafarers tax relief.
4. Your UK company can pay out residual profits (after corporation tax id deducted) as dividends to shareholders.

By managing the structure correctly a UK Ltd company can be a tax-efficient vehicle in a Norway, achieving gross income retention rates of between 65%-80% as opposed depending on individual circumstances in an environment where starting tax rate is 28%.

UK Self-assessment tax returns - late filing

Three million people have not yet filed their self-assessment tax returns in the UK. Last year one million were late - that's £100 million into the Chancellor's coffers in penalties not to mention interest charges !! Money for old rope ? 

Individual taxpayers have 9 months to file a self-assessment tax return after the tax year end on 5 April each year, and yet one million fail to do so. Why ? 

Within each year I file tax returns for clients and approximately 40% of those are filed in the final two months  before the 31 January deadline. This, despite sending reminders each year. 

I have thought about this many times, why ? Apathy, fear, finances, cash-flow ?

Is there a misconception that once a tax return if file and tax due has to be paid there and then ? A self-assessment tax return can be filed and time after 5 April each year and HMRC will send a bill if tax is due and payable but that does not have to be paid until 31 January of the following year.

Are people afraid of what they might have to pay and stick their heads in the sand for as long as possible ? Isn't it better to know the situation and to plan for any outcome ? Getting the tax return done quickly gives breathing space (up to 9 month) to find a solution and to look at possibilities to legitimately reduce the final tax bill.

Is too much time given to file the tax return ? Does this create apathy ? In other countries the time to file is much shorter:

Norway - 5 months
USA - 4 months
France - 5 months
Spain - 6 months

Coming to the end of another 'mad month' I can say that it is really not worth waiting. The number is sighs of relief I hear on the telephone or emails with comments such as "what a lovely surprise !", " a refund ?" , "I wish I had done this sooner"..... these all tell me that 9 months of fretting is really not worthwhile.

.....it could turn out that HMRC have been holding onto your money without good reason.

Norway agrees exchange of information with Panama

It has long been a desire for the Norwegian tax authorities to expose income that individuals have secreted away in offshore tax havens. The Norwegian Finance Ministry have now declared a 'significant breakthrough' obtaining agreement from Panama to disclose financial information. 

They will now be able to obtain information on money transfers as they now do with 38 tax havens around the world. The Norwegian Finance Ministry continue to negotiate with countries such as Hong Kong, United Arab Emirates, Jamaica and Bostwana.

Individuals are encouraged to review their current tax arrangements and to seek advice where there is potential exposure.