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Do You Need to Complete a Tax Return


If you have relatively straightforward tax affairs and already pay tax through Pay As You Earn (PAYE) you probably won’t need to compelte a tax return.  However, if you have more complicated tax affairs, or income from several sources, you may need to complete one.

Who needs to complete a Tax Return

You will need a complete a tax return each year if you:

  • are self-employed (including members of a partnership)
  • are a company director (except not for profit organisations)
  • are a minister of religion (of any faith)
  • get rent or income from land and property in the UK (but if you are an employee and this income is less than £2,500 a year a tax return may not be necessary)
  • have other untaxed income and the tax due on it cannot be collected through a PAYE tax code
  • have taxable foreign income of more than £300, even if you are not normally resident in the UK (this includes non-resident landlords)
  • you receive, or can be treated as receiving, annual income from a trust or settlement, or any income from the estate of a deceased person, and further tax is due on that income
  • are a trustee or personal representative (including people who manage the tax affairs of deceased persons)
  • are a trustee of certain pension schemes
  • are a Name or member of Lloyd’s
  • are an employee or pensioner with more complex tax affairs - see below

If you have any income that is not taxed at source, like rents or freelance earnings you may need to complete a tax return.

Employees and pensions with complex tax affairs

You will need to complete a tax return if you:

  • have an annual income of £100,000 or more
  • have annual income from savings or investments of £10,000 or more (before tax)
  • claim against tax for expenses or professional subscriptions of £2,500 or more
  • have untaxed income of £2,500 or more (although some pensioners may be able to pay the tax on this through their PAYE tax code)
  • owe tax at the end of the year that cannot be collected through a change in your PAYE tax code for the following year.

If you are 65 of over, HM Revenue & Customs may ask you to complete a tax return so that they can work out how much higher personal allowance or married couple’s allowance you should get.

Changes that might trigger the need for you to complete a tax return

Typical changes that may mean you need to complete a tax return for the first time as an individual might be:

  • large increase in income, a windfall or a large inheritance
  • selling shares
  • giving away money, investments or property

Capital Gains and tax returns

You may need to fill in a tax return if you have ‘capital gains’ (profits from the sale of certain assets) worth more than the annual exempt amount (AEA).  For example, for the tax year 2007-08 this is £9,200.  You may also need to complete one if you have disposed of (for example, sold or given away) chargeable assets worth over four times the AEA, so for 2007-08 that would be £36,800.

If you need assistance with your tax return, or have any questions, why not contact us and see how Davenports can help.  Details of the annual exempt amounts for all years can be found on our website

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