High earners are individuals who earn a significant amount of income and are usually in the top income tax bracket. These individuals may be self-employed, company directors, or have multiple sources of income ...
It is important for high earners to keep accurate records of their income and expenses!
HMRC is writing to those individuals it believes may need to submit a self-assessment tax return. There are three types of nudge letters:
They have a dormant self-assessment account
They have received a notice to submit a tax return for 2021/22, but have not done so
Are not in self-assessment, but their level of income suggests they should be
If notified, the high-earning individual should send the return to HMRC by the 29th of September 2024 and register for self-assessment if they haven't already done so. Remember, the process of completing a tax return can be complex and time-consuming, especially for individuals with a high income.
The return should have been submitted, and the tax paid, by the 31st of January 2023 so HMRC will be charging interest on the amount due and could issue penalties for late payment.
And, of course, if you don't think a self-assessment tax return is required, you should contact HMRC and let it know why. The consequences of not doing so are set out in the letters you may receive.
One of the key differences for high earners when it comes to tax returns is the additional tax reliefs and allowances they may be entitled to. For example, individuals with a high income may be able to claim tax relief on pension contributions up to the annual allowance. They may also be eligible for the Marriage Allowance, which allows couples to transfer a portion of their personal allowance to their spouse or civil partner if one of them earns below the personal allowance threshold.
"It is important for high earners to keep accurate records of their income and expenses throughout the tax year!"
This will make the process of completing a tax return much easier and ensure that all income and deductions are accurately reported. HMRC may request evidence of these records, so it is important to keep them for at least six years.
By fulfilling their tax obligations, high earners can ensure that they are paying the correct amount of tax and avoiding any potential issues with HMRC.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you're a high-earner wondering if you need to submit a self-assessment tax return for 2021/22, it may be a great idea to call me on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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