Throughout the year, we receive reminders through the national media that we may be required to file a tax return (Form 11) by 31 October. Many of us will dismiss the reminders on the basis that we do not fall into the category of individuals who are required to file the income tax/capital gains tax return.
However, it may be wise to take stock and consider if there is a requirement to file a Form 11 and to consider the necessary details to be included. Failure to submit an income tax return on time may lead to a surcharge of 5% or 10% of the tax payable depending on how late the return is.
Who is a chargeable person?
For income tax purposes, a chargeable person is an individual who is required to file an income tax return (i.e. Form 11).
It is generally recognised that self-employed individuals and directors with more than a 15% shareholding in a company are chargeable persons and are required to file the annual Form 11. Individuals who are in receipt of PAYE income only (and are not proprietary directors) are not generally required to file a Form 11. In addition, those with PAYE income and small amounts of other income may not be required to file on the basis that the other income can be taxed through the payroll by adjusting tax credits, or where the income may be taxed at source.
The main purpose of this article is to highlight that there are many other ways in which an individual, who would not otherwise be obliged to file an income tax return, becomes a chargeable person. For the avoidance of doubt, a taxpayer is considered to be a chargeable person and therefore required to file an income tax return once they fall into one or more of the following categories:
If the taxpayer is using Revenue Online Service (ROS) to file their tax return, they are now required to confirm why they are filing a Form 11 and what deems them to be a chargeable person.
Foreign bank accounts
For individuals who are generally in receipt of PAYE income, particular care should be given when considering foreign bank accounts. Opening a foreign bank account deems a taxpayer to be a “chargeable person” for self-assessment purposes in the year in which the bank account is set up. Full details of the bank account, including details of money deposited, must be disclosed.
In addition to this, it is worth noting that foreign currency may be considered a chargeable asset in itself and as such should be considered for CGT purposes.
Capital Gains Tax
Capital Gains Tax (CGT) is an important aspect of the Form 11. Any disposals of assets should be reported on the Form 11. This information should include both the consideration received for the asset and the category of the asset which was disposed of. Any gains or losses should also be detailed on the Form 11.
Any CGT due relating to disposals in 2023 should be paid by the relevant due dates, which are:
Additionally, if the taxpayer is claiming a CGT relief in respect of a disposal, this should be disclosed in the relevant section of the Form 11.
Chargeable Assets Acquired
Details of any chargeable assets acquired during the tax year and the consideration paid for same should be included on the Form 11.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars private client team below: