If you are required to complete a Self-Assessment Tax Return for the first time, you have a duty to “notify” HMRC of chargeability to income tax and/or capital gains tax (in some cases you can use the ‘real time’ capital gains tax service to avoid completing a Tax Return).
This requirement may catch many individuals off-guard, so it is important to be aware of when and how to notify HMRC.
When to notify by?
Notification to HMRC must be made by 5 October (a window of 6 months) after the end of the tax year in which you first become chargeable (to income tax and/or capital gains tax).
Example: If you first started letting out your second home from 1 June 2021, you became chargeable to income tax in the tax year 2021/22 (i.e. 6 April 2021 – 5 April 2022), you must notify HMRC by 5 October 2022.
How do I notify?
HMRC accept registering for Self-Assessment as notification of chargeability, so I have explained ways you can do this below.
I am not Self-Employed or a Partner:
You can notify HMRC of your chargeability and register for Self-Assessment through the form “SA1”, which you can find on the government website (below). This form can either be submitted online or printed and posted out to HMRC.
I am Self-Employed:
If you are self-employed, not only do you need to register for Self-Assessment, but you must also be registered for Class 2 NIC (National Insurance Contributions). To notify HMRC of your self-employment status, either register online through the government online services, submit the “CWF1” form online or post this out to HMRC.
I am a Partner in a Partnership:
Before a partner can register for Self-Assessment and Class 2 NIC, the partnership will need to be registered with HMRC by the “nominated partner” through the form SA400.
You will need your partnership’s Unique Taxpayer Reference (UTR) in order to register as a partner, and this will be issued to the nominated partner once the SA400 has been processed.
Individuals can register for Self-Assessment and Class 2 NIC through the form “SA401”, whereas if the partner is not an individual (e.g. company or trust), the form “SA402” must be used instead.
These forms can be found on the government website and can either be submitted online or printed and posted to HMRC.
How long does it take for HMRC to process my forms?
It usually takes HMRC around 2 weeks to process these forms (4 weeks if you are living abroad), after which you will receive your UTR by post. However, there have been cases where there have been substantial delays, so it is important to register before the deadline. If you register prior to 5 October, the onus is on HMRC to issue you with a UTR in time to complete your Return and pay your tax.
You will need your UTR to set up your Self-Assessment account and submit Tax Returns. If you are using an accountant, you will also need to pass your UTR to them when authorising them to act as your Tax Agent.
After notification of chargeability
After you have registered for Self-Assessment and notified HMRC of your chargeability, HMRC should issue you the letter “Self-Assessment: Notice to complete a tax return” annually at the end of each tax year, confirming your requirement to file Tax Returns for that tax year.
You are not required to notify them again each year, unless HMRC withdraw the notice issued.
Any late notifications may be subject to penalties, but good news, it is unlikely a penalty will be charged if you’ve submitted your Tax Return and paid the full tax liability on or before 31 January (after the end of the tax year), even if you miss the deadline to notify, as long as HMRC have issued you with a UTR to enable you to do this.