When should I fill in a self-assessment tax return?

You generally need to fill in a self-assessment tax return if you receive investment income, UK dividends exceeding £500, foreign dividends or interest, income as a sole trader with sales over £1,000, rental income over £10,000 gross, income from trusts or estates, or capital gains over £3,000.

When will HMRC send a simple tax calculation instead of a return?

HMRC may send a simple tax calculation if it has all your income information from third parties, such as employers, pension providers, banks, and the government, and not all income is taxed at source.

What are the penalties for not filing a self-assessment tax return?

If you are required to file a self-assessment return and neglect to do so, you will face severe penalties from HMRC.

Home / Business and Economy / Tax Alert: Pensioners Caught by Income Tax!

Tax Alert: Pensioners Caught by Income Tax!

30 Jan

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Summary

More pensioners are exceeding the frozen £12,570 tax threshold.
HMRC may issue a simple tax calculation for straightforward cases.
Penalties for failing to file a required self-assessment are severe.

Tax Alert: Pensioners Caught by Income Tax!

More individuals, particularly pensioners with modest private pensions, are finding themselves subject to income tax as the £12,570 personal allowance remains frozen. While a self-assessment tax return is a common requirement for income exceeding this threshold, not everyone needs to complete one. HMRC may automatically generate a simple tax calculation for those with straightforward affairs, especially if income is solely from employment or if other sources are easily accounted for.

However, complex tax situations involving investment income, dividends above £500, foreign income, sole trader earnings over £1,000, rental income exceeding £10,000 gross or £2,500 net, or capital gains above the £3,000 allowance necessitate a self-assessment return. Penalties for non-compliance can be significant. For tax years 2024/25 onwards, reporting the High Income Child Benefit Charge will also require a tax return unless paid via PAYE. Future changes, such as Making Tax Digital for landlords and the self-employed from April 2026, will introduce quarterly reporting for incomes above certain thresholds.