Do I have to complete a tax return?

Updated on 13 November 2017

Some migrants working in the UK will have to complete a formal tax return each year. In this section we explain what a tax return is and whether or not you have to complete one.

What is a tax return?

In the UK some people have to complete a tax return each year. This is a form in which you show your income and capital gains for a tax year. You can also use the form to claim tax allowances and reliefs. You send the form to HM Revenue & Customs (HMRC) either on paper or online. The information on the tax return is used to calculate your tax liability. This is called self assessment.

Most people in the UK pay all their tax ‘at source’, for example, through Pay As You Earn (PAYE) if they are employed, and are not required to file a tax return. However, where your tax affairs are complicated you have to complete a formal tax return – receiving foreign income and gains can make them complicated.

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Do I have to complete a tax return?

UK source income

If you have only UK source income and that income has tax deducted at source, then you probably do not need to complete a tax return, regardless of your residence or domicile status. Please note that all self-employed people in the UK, even those who pay tax at source under the Construction Industry Scheme (CIS) have to complete a tax return. 

You may have some bank or building society interest – this does not have tax deducted at source from 6 April 2016, but if it is less than your personal savings allowance, you do not need to complete a tax return. 

People who have UK source income that has not been taxed at source, or not taxed at the correct rate, and on which tax is due, may be required to complete a tax return. Such income would include, for example, rental income, income from investments or perhaps employment income that has not been taxed correctly under PAYE.

There is a tool to help you decide if you need to fill in a self assessment tax return on GOV.UK.

There is information about who has to complete a tax return in our ‘tax basics section’.

The onus in the UK is on you, the taxpayer, to tell HMRC if you need to complete a tax return (hence ‘self assessment’). You must register for a tax return by 5 October following the end of the tax year in question; otherwise you could incur a penalty. 

Foreign income

If you have some foreign income and gains, but are non-resident, then you probably do not need to complete a tax return, unless you need to complete one for some other reason not related to your foreign position, for example you are self-employed.

If you are UK resident and you have some foreign income and foreign gains but can benefit from the rules which exempt them automatically from UK tax, (for example the £2,000 exemption or the £10,000 employment (plus £100 interest) exclusion) you probably do not need to complete a tax return.

In any other situation you will normally have to complete UK self assessment tax return and tell HMRC about your foreign income and gains. This is the case even in they have already been taxed in your home country. You may have to provide HMRC with a lot of information.

The onus in the UK is on you, the taxpayer, to tell HMRC if you need to complete a tax return (hence ‘self assessment’). You must register for a tax return by 5 October following the end of the tax year in question; otherwise you could incur a penalty.

You will probably need to do this via form SA1. You can find out more on GOV.UK.

Upon registration you will receive a Unique Taxpayer Reference (UTR), which you should keep safe. You will need this when completing your tax return.

If you are receiving foreign income and are really unsure as to whether or not you need to complete a tax return, you should seek help from HMRC Residency, or a professional tax adviser. You can find contact details for HMRC Residency on the GOV.UK website. You can find an adviser on the Chartered Institute of Taxation website.

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What do I need to do?

If you do need to complete a tax return, be aware that it is a legal document and you should take every reasonable care in completing it. It is a full reconciliation of worldwide income and it is important not to leave out any sources of income – no matter how small or whether tax has been deducted at source.

In order to complete the self assessment return accurately you may have to do some or all of the following things:

  • tell (notify) HMRC that you have a tax liability for a particular tax year by 5 October after the end of the tax year;
  • establish your residence position for the tax year concerned, which will involve following the rules of the Statutory Residence Test;
  • establish your domicile position;
  • decide whether or not you want to file on the remittance basis with regards to your foreign income/gains;
  • if filing on the remittance basis, consider whether any double taxation agreement provides for a re-instatement of UK personal tax allowances;
  • if you are filing on the arising basis get details of your worldwide income and gains;
  • find the appropriate exchange rates for the foreign income or gains in order to convert to £. You can find exchange rates on the GOV.UK website;
  • consider whether any double taxation agreement provides for an exemption from UK taxation for any relevant foreign income source or, failing that, provides a credit for overseas taxes paid;
  • if there is no double taxation agreement consider whether there is unilateral relief in the UK for overseas taxes paid.

If you do need to file a tax return, we strongly recommend that you should seek help from HMRC and/or a professional tax adviser if you need to make a remittance. You can find an adviser on the Chartered Institute of Taxation website.

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