Taxes can be annoying – a pain to deal with and irritating to pay, especially when you read all the stories about the sneaky ways the mega rich avoid paying tax. So if a wave of reluctance is rising up in you, here are 5 reasons to submit a self assessment tax return even if you don’t want to:
1 Create a Tax Loss to Use Against Future Business Profits
When you are self employed the tax & national insurance you pay is based on your business profits (all your income less all your expenses). So if you have made a loss in your business, then not only does this reduce the tax you need to pay but by recording this loss officially on a tax return you can carry this loss forward and set it off against future profits you make.
2 Tax Returns are Part of the Mortgage Application Process for the Self Employed
If you are planning to apply for a self employed mortgage then you should be aware that most lenders will request tax returns for the last 2 or 3 years to verify your income.
3 It is a Legal Requirement
Depending on your personal situation, submitting a self assessment tax return may be a legal requirement. For example
- You are self employed
- You are a Company Director
- You are employed and earn more than £100,000 a year
Find out more circumstances where HMRC require individuals to submit tax returns here.
If you are legally required to submit a tax return or have registered for self assessment then failing to submit a tax return will result in penalties & interest.
4 You May Not Need to Pay Any Tax
Everyone is allowed to earn up to a certain threshold without paying any tax – for 2018/2019 this is £11,850 (this is known as your personal allowance). However everyone must declare their earnings to HMRC, whether this is through an employer or self assessment tax return. So although you may be legally required to submit a tax return, depending on your circumstances, you may not need to pay any tax if you have not earned above the personal allowance.
5 Marriage Allowance
The marriage allowance is an underused tax break but it allows one person to transfer 10% of their unused personal allowance to their spouse, potentially saving £200 in tax. If you are self employed and have unused personal allowance, you can claim for the marriage allowance on your personal tax return. Read More About The Marriage Allowance.