Return of Paper Tax Returns!
Background
For a number of years now the vast majority of taxpayers have been required to file their self assessment tax returns electronically online as HMRC moved away from paper returns. However, due to problems with HMRC’s software, this year could see a need to file a paper tax return for 2016/17 for certain taxpayers in order to avoid paying too much tax.
The software problem has arisen due to the various complexities of the interaction of the dividend and personal savings allowances, introduced in April 2016, with the income tax rate bands. Unfortunately software providers had insufficient time to correct the errors for the start of the filing of 2016/17 tax returns, and it appears the problems will now not be corrected until the filing of 2017/18 returns.
Detail
In certain situations taxpayers could find themselves paying up to £1,000 too much tax if they use HMRC’s software or some third party packages.
The two main groups of individuals affected by the software issues are as follows:
- Individuals with total savings and non-savings income over £32,000, of which the non-savings income is between £11,000 and £16,000.
- Individuals with non-dividend income between £27,000 and £32,000 and dividend income which takes their total income into the higher rate band.
HMRC have included these groups in their list of exclusions from requirement to file self-assessment returns online. The deadline for filing a paper return is 30 October 2017, however for those individuals affected by the software issue the deadline has been extended by HMRC to the usual online filing deadline of 31 January 2018.
For paper returns filed after 30 October 2017, a ‘reasonable excuse’ claim will need to be submitted together with the paper return citing the exclusion.
It will be essential for those individuals who think they may potentially fall into one of the above categories, or want to be certain they do not, to get their income details together sooner rather than later this year as extra time is likely to be needed in preparing and then checking a paper return.
If you have any questions on the above or require more information please contact our Tax Director, Jenny Marks.
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