HMRC don't want tax return - what about casual earnings?

jagu

Until a few years ago, my wife always completed a tax return. It included her employment plus a few hundred pounds of casual earnings. Then HMRC informed her that they would not be requiring a tax return any more.

Obviously, she ought to pay tax on her casual earnings but what should she do when HMRC have officially said they don't want a tax return? They knew from the last return she submitted that she had these earnings.

Bluebirdman_of_Alcathays

What nature were the casual earnings?

badger09

jagu wrote: »

Until a few years ago, my wife always completed a tax return. It included her employment plus a few hundred pounds of casual earnings. Then HMRC informed her that they would not be requiring a tax return any more.

Obviously, she ought to pay tax on her casual earnings but what should she do when HMRC have officially said they don't want a tax return? They knew from the last return she submitted that she had these earnings.

After the end of each tax year she should write to HMRC and tell them the amount of her casual earnings to previous 5th April. She should keep a copy of the letter.

HMRC will then adjust her code number so the tax on her casual earnings is paid through her PAYE salary/wages.

JulieM

Check the last tax coding notice to see if they have made an adjustment in respect of the casual earnings. They may be assuming that the casual earnings will be the same every year and are already taxing her on it.

jamesd

She'll still need to tell HMRC about the casual earnings each year. HMRC just don't want her to have the bother of doing a full tax return each year any more, having decided that it's pointless extra work for her and them. Phone or letter are fine for this.

emmb

I had a similar thing ages ago...I had to fill in a tax form every year because I was a 40% tax payer but the only income I had was payg and interest. Then they wrote to say I did not have to fill in tax return anymore. So, I didn't.

I was confused as to why They were not bothered about the interest Wishful thinking, I wondered if it must have been within a limit or something .Recently I looked into it, suspecting that should have been paying 40% tax on my savings instead of the 20% taken at source over the years...

Only to find out the tax office had fixed my interest at the last known amount on the last tax return and been taking the appropriate tax off. Thing is in those days the interest rate was vastly different to now so for many years I've earnt less and less and now I earn a fraction of what I did then. So I'd been overpaying tax all these years!!!! Ironicic when I'd been feeling guilty I might have been underpaying.

Now I need to try to reclaim some of that tax by announcing the actual tax income I received and seeing if they'll review it, but the tax office will only deal with the last five years.


In summary, it is exactly as another person suggested, they assume the amount is the same and tax accordingly. Keep an eye on whether that puts you out of pocket.

teddysmum

jagu wrote: »

Until a few years ago, my wife always completed a tax return. It included her employment plus a few hundred pounds of casual earnings. Then HMRC informed her that they would not be requiring a tax return any more.




Obviously, she ought to pay tax on her casual earnings but what should she do when HMRC have officially said they don't want a tax return? They knew from the last return she submitted that she had these earnings.

Is she earning below her personal allowance ?

jagu

She's earning above her allowance as a teacher, but does some piano playing on the side. It seems odd to me that HMRC want us to write them a letter (or wait on the phone for half an hour). I use TaxCalc for my own tax return and it was really quick and easy to prepare my wife's the same way, submitting it online. Seems like a backward step to write or phone.

badmemory

Personally, I find it far easier to fill in the self assessment forms than to write a letter, as when writing a letter (which I did for my mother) I still had to refer to the form to make sure I got everything in first time. A form is much easier and less likely to lead to errors. As for ringing them, with the new savings tax, that is going to be a nightmare, especially with all the "you've coded it but it is very wrong" calls there will be.

whitewitch21

emmb wrote: »

I had a similar thing ages ago...I had to fill in a tax form every year because I was a 40% tax payer but the only income I had was payg and interest. Then they wrote to say I did not have to fill in tax return anymore. So, I didn't.

I was confused as to why They were not bothered about the interest Wishful thinking, I wondered if it must have been within a limit or something .Recently I looked into it, suspecting that should have been paying 40% tax on my savings instead of the 20% taken at source over the years...

Only to find out the tax office had fixed my interest at the last known amount on the last tax return and been taking the appropriate tax off. Thing is in those days the interest rate was vastly different to now so for many years I've earnt less and less and now I earn a fraction of what I did then. So I'd been overpaying tax all these years!!!! Ironicic when I'd been feeling guilty I might have been underpaying.

Now I need to try to reclaim some of that tax by announcing the actual tax income I received and seeing if they'll review it, but the tax office will only deal with the last five years.


In summary, it is exactly as another person suggested, they assume the amount is the same and tax accordingly. Keep an eye on whether that puts you out of pocket.

The same thing happened to my dad but they did send him a tax code so he was able to get in touch with them and get it changed.

dori2o

Easiest thing to do is register for a Personal Tax Account.

Via this your wife can then notify HMRC of the correct amount of casual earnings and her tax code can be updated and previous year reviewed if necessary.