When completing your tax return you need to ensure that you include all forms of income, no matter how small.
Your income to include:
- Employment income – use your P60 for the income, don’t forget the P11d for business expenses and benefits. Also include any tips or non-taxed income received.
- Work related expenses – this includes items like work related training, if you as the employee have paid for this then this should be included on your tax return as a business expense. You therefore receive tax relief on the cost of anything work related.
- Self-employment income
- Other sources of income such as selling on the internet, car boot and trade magazine sales
- Bank interest received – you’ll receive a Tax Deduction Certificate dated 5th April each year
- Dividend income received – look out for your Dividend Distribution Certificate each time the dividend is declared and paid.
- Property income received – if you rent out property then you’ll need to keep separate records of each property. See notes below.
- Foreign income – any income received from abroad, i.e. interest, foreign dividends etc.
- Child Benefit – you may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have an individual income over £50,000 and either: you or your partner get Child Benefit, or someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep. It doesn’t matter if the child living with you is not your own child.
- Capital Gains – the capital gains annual exemption is £10,900 for the 2013-14 tax year and £11,000 for the 2014-15 tax year.
Notes on Rental Property
The Rent a Room Scheme lets you earn up to a threshold of £4,250 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else. You can let out a room or an entire floor of a residential property, whether or not you own your home. You can also use this scheme if you run a bed and breakfast or a guest house.
You can’t use the scheme for homes converted into separate flats.
If you earn less than the threshold, then the exemption is automatic and you don’t need to do anything. But if you earn more than the threshold, then you must complete a tax return and you can then opt into the scheme and claim your tax-free allowance. You need to do this on your tax return.
If you are unsure what you should record – we can help you make sure you complete your Self-Assessment Tax Return correctly, please get in touch.