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Do I need to file a UK tax return?

You may be asking yourself: do I need to complete a UK tax return?

  • You may be on UK payroll, so why do you need to file a tax return, as you pay tax directly to HMRC each month?
  • You may not even live in the UK, but have UK income, so do you need to file a tax return? why should you, you may be asking yourself, as you will pay tax in country of residence, why the UK?
  • You may live in the UK but have foreign income from other countries or previous countries of residence, do you need to pay UK on these amounts, as you file tax returns in the foreign country?
  • Now you might be asking yourself, if I do need to file a tax return, by when do I need to do this and how much tax will I need to pay?

If you have some of these questions, please read this blog.

UK Employed

If you are employed by UK company and pay tax via the PAYE system, you will need to file a tax return if you have earnt more than £100,000 in that tax year.

In a circumstance that you are a higher rate taxpayer but earn less than £100,000 and your pension scheme via payroll is “basic tax relief at source” scheme, you will be able to claim a tax credit via your tax return, this will mean you will be owed a tax refund from HMRC. Also, if you have a private pension, you will receive a tax credit.

In a circumstance that you were on UK payroll and mid-tax year, you left your employment and did not receive any further UK income in that tax year, you will be deserving a tax refund, as you would have been overtaxed via your payroll. Common example would be if you decided to leave the UK in the middle of the tax year.

In a situation that you personally paid for extra travel expenses to perform extra work tasks for your employer and did not receive a refund via payroll from your employer, you can claim the amount as a tax credit.

UK Property Income

If you receive UK property income, you will need to pay UK tax even in a situation that you are a non-UK resident and pay tax in your country of residence. UK have first rights to this tax, so make sure to pay tax in the UK and apply a tax credit in your tax return in country of residence.

If you are not a UK resident, you will need to apply for NRL status with the UK authorities to start the process of filing UK tax return.

Foreign Income

If you are a UK resident and have received foreign income, you need to pay UK tax on this income. If you have already filed a foreign tax return and paid tax in country that received the income, the tax amount paid can be applied as a tax credit in your UK tax return.

In a situation that you are a new UK resident, for the first 6 years of moving to the UK, if you have not remitted the foreign income to the UK, this income is exempt from UK tax.

When does UK tax return need to be submitted? How much UK tax will I need to pay?

The UK tax year starts April 6 and ends 5 April of the following year. You need to file a tax return by January 31 of the following year. So, for 2021, tax year ended April 5 2021 and tax return needs to be submitted by 31 January 2022.

In majority of cases, you will receive an annual personal allowance, whether you are a UK or non-UK resident. The standard allowance for 2020/21 tax year is £12,500 but my vary on your individual circumstances. So, the first £12,500 of income is tax free!!!

Next £37,500 is taxed at 20%, further income at 40% until £150,000 and any further income above this amount is taxed at 45%.

Any Questions

If you have any further questions or require assistance with filing your UK tax return, please contact me, either by email shimshon.goodman@fkgb.co.uk or 0203 950 7693.