Question regarding income tax filing (self-assesment) for people who are unemployed

manny1980

Hello:

My mother is unemployed...she lives off on some pension and interest she earns from her savings in the bank but her total income from both is below the tax-free allowance. When she contacted HMRC two years ago, they informed her she does not owe any taxes and hence does not have to file her tax for that year. Moreover, they said they will contact her accordingly to file her taxes if they think she owes any taxes.

However, I have recently heard that everyone is required to file taxes in the UK whether they owe any taxes or not...is this correct? When did this change? We are prepared she may now have to pay a penality of £100 but rather file them now then not. She gets worried in case she has done anything wrong hence I just thought maybe there has been some change in law, hence wanted confirmation what she should do, if anything.

Elaine_Wilson

She only has to file a return if she has been asked to. If she had received a notice to complete a return it would have to be completed even though no tax is due. But if no notice was issued she is OK.

However, she always has the responsibility to notify the tax office if she owes them tax. So if a premium bond comes up and she gets £50,000 interest on investing the money she would need to tell them and they would ask for a return to be completed.

manny1980

Thank you Elaine That took away a bit of concern as I read in news articles to file taxes even if you owe no money...that concerned me for my mother as it was not mentioned in the article on what you said above.

There was something else I wanted to ask regarding Capital Gain Tax.

My mother sold off some of her shares, in recent months, she inherited from my father after he died a few years ago as her income is, as I mentioned above, less than the tax-free allowance. I have read on HMRC website that any individual can earn a max £10,000/ year on the shares initial evaluation (i.e. in her case when she inherited it). She did make some profit when she sold her shares but it was well below this limit. What are her liabilities in regards to taxes if her profit was below this amount? i.e. should she report she sold these shares if she made profit less than the set-threshold of 10K or the company that she deals with will do this on her behalf?

agrinnall

There is no requirement for everyone to file a tax return, I don't know where you would have seen that but it's wrong.

Does your mother get the interest on her savings paid gross or is tax deducted before it's paid? If interest is deducted she can reclaim that, a tax return is one way but completing form R40 is easier. In future she should complete a R85 for each account so tax isn't deducted.

The CGT exemption for 2010/11 is £10,100, if her gain is less than that there is no tax to pay and no need to file a return unless the total of the sale is more than £40,4000.

manny1980

agrinnall wrote: »

There is no requirement for everyone to file a tax return, I don't know where you would have seen that but it's wrong.

Does your mother get the interest on her savings paid gross or is tax deducted before it's paid? If interest is deducted she can reclaim that, a tax return is one way but completing form R40 is easier. In future she should complete a R85 for each account so tax isn't deducted.

The CGT exemption for 2010/11 is £10,100, if her gain is less than that there is no tax to pay and no need to file a return unless the total of the sale is more than £40,4000.

She gets gross interest paid as she filled form R40. Her sale was not so high as £40,4000 with the gains well below £10,100

Thank you for your help.