Can I avoid getting a tax return?

stec00

I know this isn't exactly the most interesting of q's your likely to see on MSE but I've been scouring the Internet with no luck so far. Hopefully there's someone here with the right knowledge & kind enough to help...

This year my salary went just slightly over the higher rate threshold. But if at all possible I'd like to avoid paying any 40% tax & especially the hassle of filling in a tax return. Don't get me wrong. I'm not looking to dodge tax in any illegal way, just in the sense of legal loopholes etc. (see below). What I'd like to know is when are these returns are sent out to people? Are they just sent out to everyone who has over £37295 of taxable income on their payslips? Or are they sent out randomly to a select few? Or are they sent out to people who make under this in case they earn interest on bank accounts etc. that pushes them over the limit (in which case how much under)?

As for the legal loophole, my company recently introduced a "salary sacrifice" scheme where taxable income can be "sacrificed" to go straight into a pension. (I think this also has advantage of not being susceptible to employer's NI). It appears as a taxable debit on the payslip. I'm interested in using this scheme to put all 40% taxable income into my pension. Am I right in thinking this would mean I'd avoid receiving a tax return or doesn't it work like this?

Thanks for any advice... cheers, Steve

Riog

Mine started going out to me when one year i moved into the 40% bracket and never did all the years later but still have to fill in the returns. They would most likely be suspicious if you questioned their reasoning .

crossleydd42

For years, when I worked, I paid tax at the higher rate and never had a tax return. After all, with PAYE, there is not way of avoiding Income Tax.
Ironically, when I retired and started to receive my state pension, which is paid gross and needs adjusting according to the occupational pension I receive, I started to get an Income Tax Return had have got one ever since. Doh!!

ctm_2

As others have mentioned, being a higher rate taxpayer is no longer a reason for automatically getting a self assessment tax return to complete, so you won't qutomatically be sent one, and therefore don't have to complete one.

If you are a higher rate taxpayer, make sure you are claiming all the releifs that are due, i.e higher rate releif on pension contributions and the extra releif on gift aid payments made.

Robert_Sterling_3

Salary sacrifice to pension seems Ok within government limits.

joe13

First year I received a tax return was when I took maternity leave and then reclaimed overpayment of tax at the end of the year. I was not anywhere near being a 40% tax payer. It is a real pain filling a tax return in , having to check building society interest etc.

Savvy_Sue

If you're filling in a tax return each year but your situation is now 'normalised', ie your only income is under PAYE under the 40% band and tiddly amounts of savings you can ASK the tax office not to send you a tax return each year. If your returns for the last few years confirm your story that you don't owe them any more tax than you're paying, they may stop sending one. Of course you're still liable for telling them if you DO have income in future which is not PAYEd. And for filling in a return if they send one to you!

But I was filling in a tax return for several years after I stopped being self-employed and returned to 'normal' work. Then I asked if they could stop sending me a tax return, and they did.

stec00

Cheers everyone. From your responses it sounds like there may be no hard & fast rules about who gets sent a return - some of you do & some don't but I'm guessing the common thing with everyone here is either you've breached the ~£37 limit in a single tax year or you're self employed.

What I really want to do is avoid being sent a tax return in the first place. Would far rather pay all money above the limit into my pension so it isn't nearly halved by the 40% but also so I can carry on as I am with small amounts of money in various bank accounts that I don't have to worry about declaring every year. Easier said than done working out exactly how much I'll need to pay in though. Guess I'll have to adjust the salary sacrifice so that my adjusted salary falls well below the limit just to make sure...

As for the government limits, I'll be well within them this year as my salary's just slightly over but next year I think these are being withdrawn so you'd be able to put 100% of your salary into your pension if you wanted to.

bunking_off

I think you may be over-estimating the effort involved. If your tax affairs are simple (and, I'd highlight, by doing salary sacrifice you're starting to complicate them...), e.g. couple of bank accounts, few shares, no CGT exposure, it literally shouldn't take more than half an hour to do the job. All you need are your bank records/share stubs, which obviously being someone clued up enough to be on this site, you must keep, yes? Get the return in quickly before you forget about it, and let the taxman do the calculation.

I started getting returns sent to me as soon as I went over the 40% threshold...always completed them early, and in general I was pretty neutral (what I owed them on higher rates on interest, they owed me on claiming a taxable loss on the company's mileage rate). After about 4 or 5 years they got bored and wrote saying that my affairs are so trivial they wouldn't bother me any more.

Nick_C_4

I can also recommend doing your tax return online. If you're avoiding going into the higher-rate bracket by making more pension contributions, then great. But once you're in the higher-rate bracket, I've always found that my tax paid is never correct (for instance, if you've made charity contributions, you can claim the higher-rate tax back). So far it's always been to my advantage, but if you fill in your return online (and you can do this even if they don't ask you to), then you can get to the stage where it does the calc for you without filing your return. If the calc is in your favour, file it. If not, then don't.

isasmurf

Salary sacrifice is a matter of employment law, not tax law. By taking advantage of a salary sacrifice scheme it is usually beneficial to both the employee and employer (as both pay less NI). The result is you have higher tax home pay, despite receiving a lower gross pay. There are a couple of salary sacrifice schemes for pensions I know of the typical one where you nominate to forgo some of your salary, or future salary increase in return for the employer paying it into your pension, or the alternative (more commonly known as a 'smart pension') where the employer will pay all your pension contributions, but reduce your salary by the same amount.

Also with regard to paying higher rate tax, remember that you will also need to pay higher rate tax on all your other income too, including any interest from savings you receive. If you don't receive a tax return, this can be paid for through an adjustment in your tax code. But it is your responsibility to inform the taxman. They won't look favourably if they find out at a later date.