5 Min read – By Nicholas Brown.
What income is included on a self-assessment tax return, PAYE, Self-employment, or Property?
A self-assessment tax return is a combination of all taxable income.
Today, we’re looking at how to avoid one of the most common mistakes on self-assessment tax returns, which is the inclusion or non-inclusion of PAYE employment income.
This can be an issue for people in the construction industry, as the job market is very fluid, and they might work for a number of agencies on both a PAYE and a self-employed basis.
This might also affect those with a full-time PAYE role but also have a small business or side hustle like eBay or Etsy store.
Firstly we need to understand what a self-assessment tax return is.
A UK self-assessment tax return is a crucial form that individuals use to report all their taxable income to HM Revenue and Customs (HMRC) for tax purposes.
It is used to calculate the amount of tax a person must pay based on their income.
By understanding the main income sources included on a UK self-assessment tax return, individuals can ensure they are paying the correct amount of tax and avoiding any penalties from HMRC.
The main sources of Taxable income that are included on a UK self-assessment tax return are:
- Self-employed income over £1,000 in a tax year
- PAYE Employment income
- Rental income from property
- Dividend income if you are a shareholder
It is important to note that not all income is taxable.
Universal credit and money lent to and from friends are not considered to be a source of taxable income, so they are not to be included on a UK self-assessment tax return.
So how to avoid the mistake?
The self-assessment tax return form has a section called “Tailor your return” that allows you to separate your taxable income over various sources, such as PAYE, self-employment, and land and property.
You must ensure to include all your “taxable income” from the variety of sources.
You’ll have the option to tick all the boxes that apply to you, which you can then provide more detail on as you progress through the tax return.
Last but not least!
There is no tick box in the “tailor your return” section for COVID grants.
Covid grants, such as the “Taxable” Self-employed taxable income support scheme grants, are included in the self-employed section rather than separated into a separate source.
Similarly, PAYE furlough payments will be dealt with in the PAYE section relating to the employment for which the payments were received.
For more info on this topic:
You might like to check out our YouTube Bright Sparks series, which has a whole episode dedicated to this topic.
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