HMRC has amended it’s guidance on self-assessment tax returns to clarify that company directors with income taxed at source under PAYE and with no other tax obligations do not need to complete a tax return unless one has been issued.
Self Assessment (SA) and Company Directors
HMRC has received enquiries about the law on the obligation to notify chargeability to tax. Guidance on Self Assessment tax returns has been updated on GOV.UK to clarify that company directors with income taxed at source and with no further tax to pay do not need to complete a tax return.
Anyone chargeable to Income Tax or Capital Gains Tax must tell HMRC they are chargeable to tax if they have:
- not received a notice to file a return or
- received a notice to file a return and HMRC have agreed to withdraw the notice.
Information on how to do this is available on the Check if you need to send a Self Assessment tax return webpage on GOV.UK .
There are some exclusions. These include:
- individuals in receipt of a Simple Assessment (unless they are chargeable on anything that is not included in the assessment)
- individuals whose income has been taxed at source
- individuals not liable to the high income child benefit charge.
Many company directors are taxed under PAYE and so will not need to give notice of liability to tax, provided they have no other untaxed income.
HMRC can choose to issue a notice to file an SA return (under section 8 Taxes Management Act 1970) to any individual. Anyone receiving a notice to file a tax return must do so by the required deadline, or they may be liable to a late filing and/or a late payment penalty.
If an individual has received a notice to file and has no other taxable income to report, they can ask for the notice to file to be withdrawn. However, HMRC may decide that they still require a return and if so, the return must be submitted, otherwise penalties may be incurred.