Tax returns - why does HMRC need figures for tax already paid..?

Alan_Cross

For many years I've been wondering why you have to declare things like pension income, savings interest and dividend payments where these, very obviously, have already had tax paid on them.

I understand the need to declare self-employment or income from renting properties... tax still has to be paid on these...

... but why does HMRC want to clutter up forms which are already generally pretty complicated???

le_loup

Because total income is what puts you into higher rate taxes.

purdyoaten

Or one even may have paid too much on this other income.

Or they may affect your entitlement to Age related allowances.

TheCyclingProgrammer

In order to produce an accurate tax calculation, all sources of income including those taxed at source are necessary. How else could you do it?

kinger101

For one, how else can you (it's self assessment) calculate the tax due without calculating total income, and tax already paid. Secondly, tax on dividends and interest is only collected at basic rate.

If you don't understand the form, you can always employ the services of a tax accountant. The form needs to be detailed, as there are many different sources of taxable income, and tax law is very complicated.

uknick

Alan_Cross wrote: »

...pension income, savings interest and dividend payments...

Why are these obviously paid net?

R85 form means saving interest can be paid gross; state pension is paid gross, and so are benefits come to think of it; dividends only have basic rate "tax" deducted as stated above.

Unfortunately, as the UK system isn't a one size fits all I can't see how else HMRC could do it.

jamesd

Besides those reasons, you doing it as well as the places paying you doing it adds some double-checking that can catch mistakes and avoid incorrect tax calculations.