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Simple Self-Assessment: A Contradiction in Terms?

HMRC made their first step towards making personal self-assessment tax return filing extinct this month by announcing the release of the first “simple assessments” to come into effect from next year.

Our first thought, at least those of us with a background in compliance, was ”I’m going to be made redundant” (did you know that accountants are amongst the most likely to lose their jobs to robots?). But on closer inspection of HMRC’s new change, it only affects two populations: state pensioners whose income exceeds the £11,500 personal allowance and employees whose PAYE tax code was erroneous to the tune of more than £3,000 in the previous year. We probably have a few more years at least before we need to sign up for Jobseeker’s.

HMRC have been spreading rumours that self-assessment tax returns will disappear for years now – it’s part of their “Making Tax Digital” tax simplification campaign. But from what we’ve seen, the UK tax system has just been growing more complex and the admin more burdensome in recent years.

Perhaps this is due to the somewhat conflicting objectives HMRC have been tasked with of a) simplifying the system whilst simultaneously clamping down on fraud and b) narrowing the tax gap. The former requires fewer declarations and filings and an element of trust, while the latter involves pouring over obscure and ambiguous parts of the legislation and questioning approaches that would previously have been accepted as pragmatic.

The result is that HMRC are driving more and more people into self-assessment and issuing more and more exhaustive enquiry notices. All of which are sent by second class post of course.

So unfortunately if you meet one of the criteria below (or various others) you still need to register for self-assessment, calculate your own tax liability, and prepare and file your annual tax return with HMRC:

  • You are self-employed
  • You earn above £100,000 per annum
  • You receive £2,500 or more of rental income
  • You are a company director
  • You are a trustee
  • You live outside the UK and earn UK income
  • You or your partner earn over £50,000 and one of you claimed Child Benefit
  • You paid foreign taxes and want to reclaim the foreign tax credit
  • You are non-domiciled in the UK and elect to be taxed on the remittance basis
  • You sold a second home or another capital asset and made a gain of more than £11,100
  • You would like to claim relief on a charitable donation
  • Your pension contributions exceed your annual allowance

But if you’re 68 and earning £12,000, you’re in the clear at least – 31 January can be just another day.

If your annual self-assessment filing requirements are too much for you, or if you are unsure about your obligations, reach out to our Private Client team for a free consultation.

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