Tax implications of earning over £100k
Tax Filing for High Earners
If you earn more than 100,000 annually, you need to file your assessment tax returns with the HMRC. If you have not been sending your tax returns, you should register by the 5th of October after the tax year in which the income was realized. We can handle your tax returns and help you avoid penalties.
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Do I Need to File a Returns if I’m Paid PAYE?
If you happen to be earning more than 100,000, you are classified as a high earner and the HMRC will be looking very closely at your money. Most high earners have more complexities in tax returns due to having more than one source of income. This calls for annual filing of self-assessment tax returns, which will ensure that all income is accounted for.
HMRC will also require that high earners file their returns since it can impact how much of your Personal Allowance will be tax-free. In HMRC language, this is what is referred to as the “adjusted net income”. The figure does not take into consideration Personal Allowance though it will comprise several types of tax relief. It boils down to a loss of 1 of tax-free Personal Allowance for each 2 over 100,000 of the adjusted net earnings. Things can get complex, which is why the HMRC requires that you file a tax return to make everything clear.
Can Submitting a Tax Return Result in Double Taxation?
You do not have to worry about double taxation as the HMRC will not tax the same income twice. However, it is easy to get it wrong if you are unfamiliar with the Self-Assessment system. There are many tax return deadlines and rules that come with Self-Assessment. You will have to register for it and you are likely to pile up penalties if you make mistakes in your filings.
Even if you somehow don’t fall into the pitfalls of Self-Assessment, you could still find that you are paying more tax than you should. Depending on the situation, you might get tax breaks on allowances that might be applied to the taxable income. Most people do not know how much they can claim for or may try to claim more too much.
What Information do the Tax Authorities Need?
HMRC will need a detailed accounting of all your income and expenses. This will include information about earning sources such as share dividends, employment, pensions and interest among others. The authorities will also expect that you declare all employment benefits. The tax authorities will also expect that you declare your allowable expenses too. It can take some getting used to and dropping the ball is more common than you may think. Contact GM If you need any advice or help.
4. Claiming expenses
5. Common mistakes
Will you help with my Tax Returns?
Absolutely! As some of the best tax specialists in the UK, GM Professional accountants provide Self-Assessment tax return services that will be excellent if you have complex tax circumstances. We will take it off your hands and work on your total taxable earnings and then file the returns for you. Our experienced tax experts will ensure you are in compliance with the HMRC regulations and save you money while at it. Contact us and learn how we can help you with your returns.