There are lots of deadlines to think about for those who must pay US expat taxes. If you are living in the UK, one of the biggest tax deadlines is coming up and we want to help you prepare. The online filing deadline of 31 January for the 2016-2017 Self Assessment Tax Return is just around the corner. Now is the perfect time to get started to beat the post-holiday rush!
Who Needs to File a Self Assessment Tax Return?
The short answer is: more people than you would think! It is a common misconception that because the UK operates a “Pay As You Earn” tax withholding system, most people do not need to file a tax return. HMRC provide a definitive list of individuals who need to file a return; this includes anyone who received £2,500 or more of untaxed income, anyone whose income was over £100,000, or anyone who has savings or investment income of £10,000 or more before tax. If you are not domiciled in the UK and you have overseas income it may also be beneficial to file a return to claim the remittance basis.
31 January 2017 is also the amendment deadline for 2015-2016 tax returns. Claiming a carried back loss or relief for a tax efficient investment, or correcting a mistake through the tax return amendment process is often easier than making a claim to reduce your tax liability through the “error or mistake” regime.
What Do I Need to File a Self Assessment Tax Return?
The deadline for filing a paper tax return is 31 October 2017, or 31 January 2018 for an online return; after that, you may be subject to late filing penalties. To file online you need a Unique Taxpayer Reference (UTR), a 10 digit reference number issued by HMRC. If you do not already have a UTR you can apply for one using HMRC Form SA1.
Other than your UTR, you will need details of any income and gains you have made during the 2016-2017 UK tax year. If you are not domiciled in the UK, you may also need details of which countries you have spent time in during the tax year.
What Are the Costs of Late Filing?
Even if you do not owe tax, you will still incur a penalty if you file your tax return late. If your return is not filed by 31 January, you will immediately be charged £100 late filing penalty. If the return is not filed three months after the deadline, daily penalties of £10 will accrue up to a maximum £900. A further penalty (the greater of £300 or 5% of the amount of tax due) is levied at 6 months and 12 months after the filing deadline.
If tax is owed, an additional penalty of 5% of the tax owed is charged at 30 days, 6 months, and 12 months after the deadline.
As well as late filing penalties and interest, there is the opportunity cost of some tax reliefs that can only be claimed with a timely-filed return, e.g. carry back of charitable contributions.
Looking for other information and pointers about paying taxes as a US expat in the UK? Check out our blog about the “5 Things US Expats Need to Know About UK Taxes.”
How Can Greenback Expat Tax Services Help?
After you register with us, you will be matched with one of our accountants who will contact you to determine your position and advise the information needed to prepare your return. You can upload the relevant documents to our customer portal – the Greenback Tax Companion – and when we have all of the information we need, we will provide you with your return for you to review. We are happy to answer any questions you have. Our team of UK tax experts will guide you through the filing process from start to finish, so get started now!
Originally published in 2015; updated January 5, 2018.