Martin Lewis has fielded a question about a state pensioner selling a property who was unsure if she would have to fill in a tax return.
During an episode of the BBC Not the Martin Lewis Podcast with a focus on tax, a listener sent in this question: “A friend who doesn’t go smartphone or the internet was previously on basic National Insurance [state] pension and previously Pension Credit, but has now sold her property and is investing the proceeds.
“Does she have to fill in a tax return if interest from her investments is more than £1,000?”
Mr Lewis added that he wasn’t sure if the “interest” was referring to her investments or her savings, but they would assume it was “a bit of both”.
Rebecca Benneyworth, from Rebecca Benneyworth & Co, said: “If the taxpayer has no pension that is being taxed, for example a private pension, then yes they would need to do a tax return because there is no other way for HMRC to collect that tax.
“However, if the taxpayer had a private pension in addition to the state pension, the bank interest could be included in the coding notice, and the tax collected from the private pension.”
There was another question from a person wanting to know if they should fill in a self assessment to declare savings interest, or if the bank would notify HMRC.
Mr Lewis’ other guest on the podcast, Kari Mellon, from Opes Tax, said that the bank would notify HMRC.
But Ms Benneyworth added: “It’s still your responsibility to tell HMRC that you need to do a tax return, and if you need to do one, strictly you should be notifying them by October 5, after the end of the tax year.”
Mr Lewis then asked his guests what exactly determines if you need to do a tax return or not.
The guests recommended a tool on the gov.uk website which has some very simple questions you can go through to work out if you need to fill in a tax return.
Ms Mellon said: “If you’ve received any income that hasn’t been taxed, then you need to go on the tool.”
The guests clarified that this includes savings income, rental income or income from online trading.
Another listener asked what to do if you previously had to fill in a tax return but then your income becomes simple, with just benefits and pensions, can you ask to be removed from having to fill in the form.
Ms Benneyworth replied: “Yes, you can ask. I would always say to taxpayers to look, if their circumstances have changed, contact HMRC and ask to be taken out.
“We do that very regularly for clients at this time of year where we know that their circumstances have changed.
“Again, it comes down to you telling HMRC that your circumstances have changed, and it’s your responsibility to ask to be taken our of self assessment.”
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