Self Assessment Rules

badmemory

00ec25 wrote: »

you are perfectly entitled to submit a voluntary SA if you consider that your figures will be more accurate than their bill. After all it is called SA for a reason.

Yes I discussed this with them & said I will give them a chance. But I will be watching - very carefully. I will still be keeping it all on my spreadsheets anyway as I need to keep track.

sorcerer

Is this statutory requirement for dividends something new? Not heard of that before.

polymaff

sorcerer wrote: »

Is this statutory requirement for dividends something new? Not heard of that before.

I can't find a direct quote, but if you look at:

https://www.gov.uk/tell-hmrc-change-of-details/income-changes

What you must tell HMRC

... you must tell HMRC about any other changes, for example when you start or stop getting:

• income from a new source, such as money from self-employment or rent from property
• taxable benefits, such as State Pension, Jobseeker’s Allowance and Carer’s Allowance
• benefits from your job, such as a company car
• income above your Personal Allowance
• money over £85,000 from self-employment (you must register for VAT over this amount)
• lump sums from selling things you pay Capital Gains Tax on, such as shares or property that’s not your main home
• income from property, money or shares you inherit, such as dividends from shares or rent from property

There is the same, limited, reference to savings and dividend income - perhaps suggesting that HMRC (believe that they) will, inheritance aside, have attributable source access to both classes of income.

[Deleted User]

https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

your income from dividends from shares was £10,000 or more before tax

which, I suppose, brings us back to the initial post.

TheCyclingProgrammer

sorcerer wrote: »

Is this statutory requirement for dividends something new? Not heard of that before.

There is no statutory requirement to declare dividends - only to declare income that is chargeable to tax.

On that basis, one would assume that if your only income is dividends below the combined personal tax threshold and £5k dividend allowance, or you only have dividends above the personal tax threshold but below the £5k dividend allowance, that no tax is due and there is no obligation to notify HMRC.

TheCyclingProgrammer

sorcerer wrote: »

I am curious about something, in the guidelines for when you need to fill in a self assessment form, it says if your income and dividends are over £10,000 you need to fill one in. Do you think this includes all income including ISA's income or just income outside of an ISA?

Dividend income inside an ISA is not taxable and therefore you do not need to notify HMRC about this income.

Dazed_and_confused

On that basis, one would assume that if your only income is dividends below the combined personal tax threshold and £5k dividend allowance, or you only have dividends above the personal tax threshold but below the £5k dividend allowance, that no tax is due and there is no obligation to notify HMRC

If only life was that simple. If you applied that logic how would HMRC ever collect the High Income Child Benefit Charge from people with salary of £50000 and dividend income (or any total income combination where income is over £50k and dividends are less than £5000).

Or make sure older pensioners get the correct amount of married couples tax allowance?

dori2o

badmemory wrote: »

If there is a statutory requirement for the dividend providers to notify HMRC of any dividends given, as there is for bank accounts with interest, you may find that they withdraw your requirement and bill you. They have just withdrawn my requirement to do SA even though nothing has changed, my taxable income is still too great to be deducted from income that can have a tax code. I will be watching their "bill" very carefully. I remain unconvinced that this is a good idea!

This is down to the MTD (making tax digital) processes that are currently ongoing.

Prior to April 2017 any tax calculations issued via the PAYE service (a P800 calculation) were INFORMAL calculations. Being informal this meant that HMRC had no legal powers of recovery where they were unable to collect the tax via PAYE. This is why they would send a person who had underpaid tax a maximum of 2 letters requesting VOLUNTARY payment of the tax due.

If no voluntary payment/payment arrangement had been agreed within 26 weeks of the date of the underpaid calculation which could not be collected by PAYE then HMRC would cancel the calculation and issue a Notice to file a tax return for that year.

By doing this HMRC are effectively making any tax due once the tax return is submitted legally recoverable.

This means that in cases where a taxpayer had a taxable income where no tax was deducted from it automatically, such as state pension, and the tax due could not be collected by deduction from the tax code at other PAYE income, that taxpayer would be asked to complete a tax return in order to calculate the tax due.

This changed from April 2017.

Following changes to the Taxes Management Act in the 2016 Finance Act HMRC will now issue a SIMPLE ASSESSMENT where the taxpayer has other income where the tax cannot be collected in full via PAYE.

In these cases a PA302 Simple Assessment - Notice to Charge will be issued, providing a calculation of the tax due, and advising the taxpayer when the tax is due for payment (same rules as apply to Self Assessment I.e. 31 January following the end of the tax year at the earliest)

The difference between the old assessments under PAYE and Simple Assessment is that these notices are now legally recoverable. This means that HMRC will be able to proceed with recovery action in order to ensure the taxpayer pays the amount due without having to resort to Self Assessment.

Because of other changes to Self Assessment between now and 2022, HMRC are removing anyone from SA who no longer needs to be in in order to reduce the number of people in the system who have relatively simple tax affairs.

Regarding the issue of investment income etc, where in the past banks and other financial companies would simply produce a data sheet and submit to HMRC detailing the amounts of interest etc, but which the information was not posted to individual records, this has now changed.

Since the change to how tax is deducted from interest/dividends, I.e. tax is no longer deducted, these financial institutions are now required to submit individual details that will be recorded on each individuals PAYE record.

This information will then be used when calculating tax liability and to calculate any over/underpayment which results in the issue of a P800/PA302/P800BACS calculation.