How To Check If You Are Eligible For A UK Tax Return
The tax authority of the British government, HMRC (Her Majesty’s Revenue and Customs), requires most of the UK population to submit a tax return. If they fail to do so, it will result in penalties and interest on the late payments.
Who is eligible for the tax return and who is not is available on the HMRC’s website, where the tool helps people check if they need to submit the form. The tool does not cater to non-residents, non-British and expats residing in the UK. Here is how you can decide if you need to submit an income tax return or not –
Are you a UK tax resident?
The Statutory Resident Test decides if you are a tax resident of the UK. Having spent more than 183 days in the UK as a working professional, you will be eligible to submit a tax return as you are deemed a UK tax resident. In this case, you will have to declare the entire of your worldwide earnings to the HMRC. A self-assessment tax return form exists to assess the same.
Untax income existence
Check if you have received any untaxed income from a UK source. This could be a rental income from a property you own in the UK or a commercial space rent in hand. Even when you are not considered a UK tax resident, receiving earnings from the UK as rental income, dividends, pensions, or salary from UK organizations subjects you to the UK tax laws. In this case, you will have to file for a return.
UK company labels
It is essential for you to realise the organisational position you hold in the UK. If you are a director of a UK registered company, you will be needed to submit a return even if you are not essentially a UK resident. This is because the sole source of your earnings is through the UK based company, and hence you are eligible to pay taxes for the same.
Income from abroad
If there is any income from abroad under your name that you need to pay taxes on, and you are a UK tax resident, you will be liable to pay taxes on your entire worldwide income. This means, even if you receive income from a source that is based out of the UK, for example, rental income from a house you own in another country, holiday rental, non-UK employment/investment, you will be needed to declare all of it and file a return accordingly.
Total taxable income
You are only liable to file for an income tax return if your UK taxable income was over 12,570 euros. Any income earned below this sum is not needed to be taxed.
UK sales
If you sell a UK property like a house, commercial space, bonds, shares, or anything that provided you with capital gains needs to be submitted for a tax return. A capital gains tax is applied on the sale of any UK property or other assets. However, if you are a UK tax citizen and you sell an asset in another country, you will not be liable to pay any capital gains tax in the UK for the same.
UK taxation eligibility
If you are eligible for any of the six factors above, you are most likely eligible to submit a UK tax return. This submission will be irrespective of the fact whether you are a UK citizen or a foreign resident/citizen. If you are unsure about the answers to any of the questions, it is best advised to seek help from an expert or professional who has legal and sound knowledge of taxation in the UK. A tax consultant understands all rules of taxes in the UK, everything about the expat tax-aware and can also help you complete and submit the UK tax return.
UK tax obligations and responsibilities
In the UK, the taxpayer is the one obliged and responsible for registering and submitting a UK tax return. The UK authorities are not the ones who are liable to send taxpayers a notice. Submitting the tax return does not entirely mean that you owe the UK government any tax, but the primary focus of the same is to avoid any late penalties, fines etc.
Submitting the return helps you claim reliefs that you may be entitled to that, helps you get rid of double taxation and save your hard-earned money.
Concluding Note
All in all, every citizen working in any country must always pay their taxes on time as it is their responsibility to compensate the government, which is providing them with all the necessary resources to earn.
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