Tax Returns & 40% tax bracket

mr_topcat

I moved into the 40% tax bracket a few months back. Do I need to complete a self assessment (tax return)?

Thanks for any help/advice.

moonrakerz

I was told by the tax man - YES ! Give them a ring and be safe.

But it is likely that many people don't realise when they are into that bracket, so they get clobbered after several years with a big tax bill !

SA isn't actually that difficult.

malcindebt

Not unless you meet any of the following criteria

- Income in excess of £100k
- Investment income in excess of £10000 (intrest/dividends)
- Untaxed income i.e. self employed income, income from property.
- Capital Gains in excess of £8800
- Expenses claim in excess of £2500
- Foreign income
- Minister of religion
- Partner in a Partnership

If you are a 40% taxpayer but do not meet this criteria then you will not be required to compete a tax return, however, if you have made payments to a personal pension (where the payment has been made after tax has been deducted from your pay) then you may be due tax relief on some of this. Also if you have investment income less than £10000, you should write to HMRC to advise the level so this can be accounted for.

Astaroth

As malcindebt says, generally not.

There can be some other situations like certain benefit in kind things you may need to deal with if your employers dont (but they are fairly few and far between)

You can always be on the safe side and check with the tax man but I am in the same bracket and have never had to do self assessment as all my benefits and salary go through PAYE

moonrakerz

I didn't meet any of the above - if only ! But was still told by the tax man to do an SA return.

mr_topcat

Thanks, I dont fall into any of those brackets so I should be ok.

malcindebt

moonrakerz wrote:

I didn't meet any of the above - if only ! But was still told by the tax man to do an SA return.

Did you by any chance have outstanding returns from years earlier than 05/06. If this is the case, then because you were higher rate in the years that were outstanding, you automatically get selected for each following year until the returns are brought up to date and the record is updated.

moonrakerz

No, I didn't.

The tax man I spoke to actually said that it was "my responsibility" to do an SA return when I went onto the 40% bracket - which was news to me !

As I said before , give the man a ring to be safe.

Pennywise

If you are in the higher rate tax bracket, you will have a higher rate tax liability on your interest/dividends, so you have to tell HMRC. Whether they send you an SA return or whether they will code the higher rate tax into your PAYE coding (based on your estimates of interest/dividends) is up to them, but you, as the taxpayer, have a legal responsibility to tell HMRC.

myrnahaz

If your income change occurred in the current year, then you don't need to SA until next year.