Do You Really Need To Fill In A Tax Form?

Taxpayers who owe less than £3,000 in tax and filed returns, may not have needed to do so.

Those who owe less than £3,000 in tax may be needlessly filling in self-assessment forms, HM Revenue & Customs has said, as more than a million people face a rush to meet the deadline.
Record numbers are expected to file a return this year due to the rise in the number of higher-rate taxpayers.
However, people who owed small amounts of tax from savings income or occasional extra work possibly need not have bothered, HMRC said.
Instead of wasting hours compiling statements and invoices and completing forms, the money could have been deducted automatically from their pay packets from April.
Accountants accused HMRC of wasting taxpayers’ time by leaving them “in the dark” over the best way to pay.
Stuart Phillips, director of tax practice at The Private Office, the financial advisers, said: “It is a great shame that in this country we are incredibly honest when it comes to paying our taxes, but HMRC doesn’t seem to be able to tell people the easiest way to do so.”
The Revenue is able to recover up to £3,000 through the coding system, whereby tax debts are deducted the following year before a salary or pension is paid.
This applies to people with “simple” tax affairs, an HMRC spokesman said, giving the example of income arising from savings interest or freelance work.
As a result, a higher-rate taxpayer could feasibly earn as much as £7,500 from other work without needing to complete self-assessment forms.
The figures implied that a saver could hold as much as £1.5 million in a bank account paying one per cent interest without needing to file a return.
Yet the spokesman said that people who telephoned its helpline would be advised against filing a self-assessment return only if their untaxed income was less than £2,500.
Every year more than 400,000 people are advised to stop filing self-assessment returns, as it was no longer necessary, the Revenue said.
They are sent letters advising against filing again unless their circumstances change.
“People with slightly more complex affairs may have to fill in a tax return but it all depends on their personal circumstances,” the spokesman said.
“We don’t want anyone to fill in a tax return unless it’s absolutely necessary.”
The number of people undertaking unnecessary paperwork could rise this year as more people are dragged into the higher-rate banding and owe tax on money held in savings accounts or other income.
Others may be unaware that they may no longer need to file a self-assessment document if their tax bill has fallen below £3,000 due to lower returns on savings and investments.
More than a million people were yet to file a tax return on Saturday morning, estimates suggest. Those who miss the deadline face a fine of £100.
An extra 1,500 call centre staff will be deployed to cope with what HMRC said would be a “very busy day”, particularly given that its 281 walk-in inquiry centres were closed last year.
People who telephone the tax office for advice may need to ring “more than once”, the spokesman said.
Elaine Clark, director of tax practice at Cheapaccounting, said: “Taxpayers just want clear advice, but try ringing for an answer and you’ll spend 30, 40, 50 minutes waiting to talk to someone.
“Because of the £100 fine for late returns, most people decide not to take the risk of asking for one and spend huge amounts of time completing the paperwork.”
Anyone filing at the last minute has left it too late to opt out of the self-assessment system.
Taxpayers who owed less than £3,000 had until Dec 30 to request exemption, HMRC said.
“We automatically review the self-assessment system to ensure only those who genuinely need to complete a tax return have to do so,” the spokesman said. “Anyone who thinks their circumstances have changed so that they don’t need to complete a return should let us know.”
Workers who earn more than £100,000, the self-employed and investors who incurred capital gains tax after selling a property or shares are advised always to complete a self-assessment.
This also applies to those who earned income from abroad or acted as company directors.

From The Daily Telegraph 02.02.2015 By Dan Hyde