Self-assessment requirement
Discussion
Is a company director legally required to fill in a SA tax return if they're taking no income from the business, and HMRC haven't asked them to do one?
HMRC website implies that this is the case, but t'internet suggests that it's only legally required if there's undeclared income to tax; or if HMRC have requested you to fill one in.
HMRC website implies that this is the case, but t'internet suggests that it's only legally required if there's undeclared income to tax; or if HMRC have requested you to fill one in.
It has been a while since I did my tax exam but I believe you only need to submit a return if you have declarable income. Generally when you earn enough to be a higher rate tax payer (and so bank interest etc is taxed at the higher rate rather than the basic rate deduction which is taken by the banks automatically).
I believe company directors are treated differently in HMRCs eyes as a director would usually charge the company a fee rather than be an employee - there are different national insurance rules as well.
Being unsalaried makes it a little more complicated, as no one works for free do they?!
I believe company directors are treated differently in HMRCs eyes as a director would usually charge the company a fee rather than be an employee - there are different national insurance rules as well.
Being unsalaried makes it a little more complicated, as no one works for free do they?!
amstrange1 said:
Is a company director legally required to fill in a SA tax return if they're taking no income from the business, and HMRC haven't asked them to do one?
HMRC website implies that this is the case, but t'internet suggests that it's only legally required if there's undeclared income to tax; or if HMRC have requested you to fill one in.
HMRC's comments on their website are not legally correct. Just because a person is a company director does not automatically make them liable to submit SA returns. Obviously, if they have SA declarable income, including company related income such as dividends, Section 336 Expense Claims (reimbursed expenses already declared on a P11D), they will probably need to register for SA.HMRC website implies that this is the case, but t'internet suggests that it's only legally required if there's undeclared income to tax; or if HMRC have requested you to fill one in.
In my opinion, regsistering to complete SA returns is actually a good thing, as it allows you to perform a tax "health check" on your affairs and essentially puts you in charge of your own tax affairs.
I think anyone who is a higher rate taxpayer, even if their main income is taxed through PAYE, would be advised to think seriously about registering for SA.
In my recent experience, the people I come across with the most problems regarding paying the correct tax each year are higher rate taxpayers who are in employment - and that includes directors.
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