How do I go about things?

Jeff_E

Hi,

So I'm in a position I've never been in before with regards to tax, and I'm not sure about how to go about things.

Up until now,  since the end of my educational life, I've always worked for other people, and never had to file a tax return, but November  last year I was made redundant, and since then I've been living off my savings. I am thinking about living like this for a while, maybe over a year while I ponder maybe starting my own business.

I also sold an asset at the end of last year to help tide me over, from which I made a decent amount, and about £25,000 more than I paid for it.

So, I'm thinking it's highly likely I owe capital gains tax on it. As my income is less than the higher rate tax bracket per year, and I think I'm allowed to make £8k from  a sold asset before capital gains tax comes in, I'm thinking it's going to be 10% of £17,000, therefore £1,700.

But I haven't a clue how to go about things? But I don't want to end up getting penalised or harassed by the tax man. One concern I have in leaving it too long to declare, is that the tax man spots the transaction for the sale that went into my bank account and treats it as income for paid work, and tries to tax me on it at the regular income tax level.

I've read various things online, much of it seemly contradictory and confusing, and at first I was thinking I had to declare something by this April? But then I read I could wait and I should receive correspondence from the tax man in October?

So my questions are , I'm guessing I'll need to fill out a self assessment form to demonstrate I'm living off savings, but when do I need to fill it in? Can I wait for the tax man to send me one?

And I will also need to declare my capital gain. But how do I do that? Is there somewhere I can declare it on a self-assessment form? And can I wait for them to contact me, or should I have already declared it before the end of the tax year? And am I in danger of getting penalised because I haven't ready?

Thanks.

Dazed_and_C0nfused

If you have a Capital Gain to report you don't wait for HMRC to contact you.

You need to register for Self Assessment before October and then file your return and pay any tax due by 31 January 2023.

But there is no point whatsoever in waiting till October to register.

The Capital Gains allowance for 2021:22 was £12,300 not £8,000.  

But you only pay 10% (if that's the correct rate) upto the basic rate threshold so how much taxable income you had will be relevant.

You have to declare all taxable income on the return, it isn't just for your Capital Gain and if you were paying tax whilst working it's likely from what you have posted that you will have overpaid income tax.  This will form part of your Self Assessment calculation and effectively reduce what you actually have to pay over to HMRC in January 2023.

If you give a bit more detail about the asset some of the people on here who know more about Capital Gains will probably comment on what you might owe.

NorthYorkie

What is the asset you have sold?

Jeff_E

Dazed_and_C0nfused said:

If you have a Capital Gain to report you don't wait for HMRC to contact you.

You need to register for Self Assessment before October and then file your return and pay any tax due by 31 January 2023.

But there is no point whatsoever in waiting till October to register.

The Capital Gains allowance for 2021:22 was £12,300 not £8,000.  

But you only pay 10% (if that's the correct rate) upto the basic rate threshold so how much taxable income you had will be relevant.

You have to declare all taxable income on the return, it isn't just for your Capital Gain and if you were paying tax whilst working it's likely from what you have posted that you will have overpaid income tax.  This will form part of your Self Assessment calculation and effectively reduce what you actually have to pay over to HMRC in January 2023.

If you give a bit more detail about the asset some of the people on here who know more about Capital Gains will probably comment on what you might owe.

Thanks for the help, and very sorry for the VERY late reply. Been very busy. That's a relief. I thought there was a danger I might be landed with some sort of penalty, but pleased I do have until October. But yes, I will get on with it.

Thanks!

p00hsticks

Jeff_E said:

Dazed_and_C0nfused said:

If you have a Capital Gain to report you don't wait for HMRC to contact you.

You need to register for Self Assessment before October and then file your return and pay any tax due by 31 January 2023.

But there is no point whatsoever in waiting till October to register.

The Capital Gains allowance for 2021:22 was £12,300 not £8,000.  

But you only pay 10% (if that's the correct rate) upto the basic rate threshold so how much taxable income you had will be relevant.

You have to declare all taxable income on the return, it isn't just for your Capital Gain and if you were paying tax whilst working it's likely from what you have posted that you will have overpaid income tax.  This will form part of your Self Assessment calculation and effectively reduce what you actually have to pay over to HMRC in January 2023.

If you give a bit more detail about the asset some of the people on here who know more about Capital Gains will probably comment on what you might owe.

Thanks for the help, and very sorry for the VERY late reply. Been very busy. That's a relief. I thought there was a danger I might be landed with some sort of penalty, but pleased I do have until October. But yes, I will get on with it.

Thanks!

You haven't replied to North yorkie's question asking what sort of asset it was you sold.

I suspect the reason for their question may be becasue if it was property, you only have 60 days from completion of the sale to pay any CGT due.