Do I have to complete a tax return?
Depending on your circumstances, you may have to complete a tax return for the UK tax authorities, HM Revenue & Customs (HMRC). On this page, we look at the following questions:
In the UK some people have to complete a tax return each year. This is a form in which you show your income and capital gains for a tax year. You can also use the form to claim tax allowances and reliefs. You send the form to HMRC either on paper or online. The information on the tax return is used to calculate your tax liability. This process is called Self Assessment.
Not all people have to complete a tax return.
The tax position of a non-domiciled student who has foreign income or foreign gains is complicated, particularly if you are not able to benefit from either the £2,000 exemption or the £10,000 employment (plus £100 interest) exclusion.
If you wish to claim that some of your foreign income is exempt because it is used for maintenance, education and training (see GOV.UK) then you will need to file a UK tax return in order to make a claim under the relevant double tax agreement.
If you are in this situation, you will normally have to complete UK Self Assessment tax returns and tell HMRC about your foreign income and gains. You may have to provide HMRC with a lot of information.
Even if you do not receive a tax return or a notice to complete a tax return from HMRC, you still have an obligation to tell HMRC that you are chargeable to income tax and/or capital gains tax. Failure to do this could result in penalties even if you do not owe any tax.
In order to complete the Self Assessment return accurately, you may have to do some or all of the following things:
- tell HMRC that you have a tax liability for a particular tax year by 5 October after the end of the tax year, so if you have a tax liability for the tax year 2019/20 you must tell HMRC by 5 October 2020;
- establish your residence position for the tax year concerned, which will include counting days of presence in the UK; for tax years after 5 April 2013, this will involve following the rules of the Statutory Residence Test;
- consider whether any double taxation agreement establishes that you are not resident in the UK for the purposes of that international agreement;
- consider whether any double taxation agreement provides for an exemption from UK taxation for any relevant foreign income source or, failing that, provides a credit for overseas taxes paid. You will have to claim this relief with your tax returns;
- consider whether any double taxation agreement provides for a reinstatement of UK personal tax allowances;
- consider whether there is unilateral relief in the UK for overseas taxes paid;
- find the appropriate exchange rates for the foreign income or gains in order to convert to pounds;
- compute any foreign income or gains using the rules set out in the UK legislation, not on the rules in the other country. This could mean income or gains which are exempt at home are taxable here in the UK;
- consider whether UK law gives any special reliefs for the foreign sources held.
In addition, although not relevant for your UK tax return, it is worth being aware that it is possible that any tax charge arising in the UK may become a deduction or credit for the purposes of your tax position in the other country.