I am Higher Rate Taxpayer (40%) should I be filling a tax return?

amcg100

I have always been under the impression that we are only required to complete a tax return if required to do so by HMRC. For the last ten years now I get a letter ' I am requiring you to complete a tax return' which I do on line, and always seem to get a heafty tax refund. Prior to getting these notices I had never competed a tax return. Something triggers off their radar, in my case a large deposit at the bank. I found it a pain at first, but these days I am well organised and usually complete it in about an hour.

My advice would be to speak to an accountant, because you could get a heafty tax refund as well.

jem16

amcg100 wrote: »

always seem to get a heafty tax refund.

I would be trying to find out why your tax code is so wrong that you are overpaying tax each year.

My advice would be to speak to an accountant, because you could get a heafty tax refund as well

Shouldn't be necessary if your tax code is correct.

jamesd

The pension answer depends on how the pension payments are taken:

1. If by salary sacrifice, reducing your gross pay, you don't tell HMRC because you already automatically get full tax relief. Salary sacrifice is sometimes called smart pensions and may also have mention of saved NI. Do not include the money paid this way in any pension boxes on a tax return, that would result in a false claim for tax relief. If you want to mention it, do it in a notes section saying it's salary sacrifice.

2. If deducted from gross pay, no need to tell HMRC to get a refund because you're already getting it, but you would need to tell HMRC if you filed a tax return because the pension contributions increase your basic rate tax band.

3. If deducted from net pay you will get basic rate tax relief added by the pension provider, adding 25% to the amount paid in, which for HMRC purposes is called "gross" even though it's not the actual gross for a higher or top rate tax payer. Tell HMRC this gross amount and they will adjust your basic rate band to give you your relief via your tax code if they can.

You can and should also tell HMRC about the estimated pension contributions in the next tax year for cases 2 and 3. HMRC will adjust your basic rate tax band and notice of coding for PAYE to allow for the planned contributions. That will prevent you from overpaying tax during the year. Getting your money sooner beats a refund later.

p00hsticks

amcg100 wrote: »

I have always been under the impression that we are only required to complete a tax return if required to do so by HMRC.

Me too. but regardless of that, it's your responsibility to let the revenue know if you are paying less tax that you should be - which is likely to be the case for higher rate tax payers like the OP if they have any non-PAYE income (for example from savings interest or share dividends outside ISAs.)