Hundreds of thousands of extra people are expected to complete a Self-Assessment Tax Return for the first time by 31 January 2014, including people who have won compensation for mis-sold payment protection insurance (PPI) and will be unfamiliar with the registration form and completion of a Tax Return.
While the PPI compensation itself is not taxed, any interest element awarded on that sum is taxable. Failure to declare that in the Tax Return could lead to a knock at the door from HMRC.
Changes to the child benefit system and a rise in the number of self-employed are behind a predicted substantial rise in the numbers of individuals who self-assess. High earners with incomes over £50,000 who continue to claim child benefit but do not complete a Tax Return could be liable, not only to repay part or all of the benefit claimed by way of a tax charge on the highest earner of the couple, but also interest and penalties on the tax unpaid.
If you think you could be affected by either of these issues please don't hesitate to contact the PayStream Tax Team for advice. Call us on 0161 929 6000 (option 3) or email firstname.lastname@example.org.