Are you receiving tax credits, such as the Child Tax Credit or the Working Tax Credit? Did you, or do you need to, complete a 2016/17 Self-Assessment Tax Return? you may need to report your final income details to the Tax Credits Office.
If you claim tax credits, the Tax Credits Office needs to be aware of your earnings so you can be paid the correct amount of credits.
This applies to you whether you are self-employed, earning dividend income, investment income, or income from rental property.
Do I need to update the Tax Credits Office with my income details?
If you claim Tax Credits, you will be aware that you need to submit a renewal form each year to continue receiving payments. When submitting renewal papers, you need to supply your income details to the Tax Credits Office by a deadline. For the 2016/17 tax year, this would have been around 31st July 2017.
If you were unsure at this point exactly what your final income was for the year, you may have supplied the Tax Credits Office with an estimate. This is common when you are self-employed and waiting for finalised accounts to confirm your earnings. If your final earnings for 2016/17 were different than the estimate you provided, you must confirm your final income to the Tax Credits Office by 31st January 2018. Otherwise, you must confirm that the estimate you gave was equal to your actual earnings.
How do I update the Tax Credits Office with my income details?
First, you need to complete your 2016/17 self-assessment. The net profit figure on your Return will be your final income amount for the tax year 6 April 2016 to 5 April 2017. This net profit amount is what you will need to update with the Tax Credits Office.
You can inform the Tax Credit Office of your income via the Government website.
When do I have to report my income to the Tax Credits Office?
If you have filed a 2016/17 self-assessment and are required to present an updated earnings figure, you need to provide this to the Tax Credits Office before 31st January 2018. This coincides with the deadline for filing your self-assessment, which is also on 31st January.
Is there other information I need to include?
According to HMRC, you must also report other sources of income you may have to the Tax Credits Office, including but not limited to: dividends, investment income, interest, pensions or property/rent.
If you are receiving tax credits as stated above, you need to tell the Tax Credits Office about your income in order to receive the correct amount you’re entitled to.
What if I don’t report my income to the Tax Credits Office?
If you receive tax credits and don’t report your final net figure from your 2016/17 Personal Tax Return, there is a chance you could receive a higher amount of tax credits than you are entitled to. If this happens and you receive too much money, you will have to repay HMRC.
This is especially crucial to keep in mind for future self-assessments, if applicable, due to changes in the dividend allowance taking effect on 6 April 2018. The tax-free dividend allowance is changing from £5,000 to £2,000 – meaning that some limited company directors and shareholders will take a higher number of dividends before 6 April 2018 than they would normally.
This will change the net profit figure on future self-assessments, which could potentially lead to incorrect tax credit awards if the income is not correctly reported to the Tax Credits Office.
How do I know if I need to file a 2016/17 self-assessment tax return?
Even if you earn a low income, earning income from certain sources requires you to file a self-assessment regardless. This is to ensure that everyone is paying the tax that they owe.
You need to file a 2016/17 self-assessment if you earned from the following sources of income in the 2016/17 tax year:
- higher-rate tax
- rent or income from property in the UK
- foreign income, even if you don’t normally live in the UK
- any form of untaxed income, capital gains or losses
- pension funds or certain savings/investments
- other untaxed income specified by HMRC
Contact us to complete and file your 2016/17 self-assessment. The deadline is one week away so act now to avoid late filing penalties.