It may seem like a long time until January with the summer holidays in full swing, but our thoughts are already turning towards self-assessment.

The next batch of tax returns relate to the 2018/19 tax year, which ended on 5 April 2019, and are due for submission by midnight on 31 January 2020.

You may need to submit a tax return if you received untaxed income during the tax year.

Most people in full-time employment usually do not need to worry about self-assessment unless they have a second income outside of PAYE.

Income from rental property

If you rent a property to tenants, rental profits will be taxable if rental income exceeds the £1,000 property allowance and you have no tax-free personal allowance available (£11,850 in 2018/19).

What tax rate you pay depends on which of the five Scottish income tax rates and bands you fall into.

Homeowners who rent out a spare bedroom to a lodger may qualify for the £7,500 annual rent-a-room allowance.

Tips and commission

Many people take on second jobs to supplement their income, and receiving tips for providing good service in a bar or restaurant is commonplace.

What you pay depends on how you receive the tips. If a customer tips you directly, you should pay income tax on them but not national insurance.

Tips that are part of your pay packet, or pooled and shared out between all staff, should have tax deducted through PAYE by your employer.

Savings, investments and dividends

Basic-rate taxpayers can earn up to £1,000 in tax-free income from savings in 2018/19.

Higher-rate taxpayers see the savings allowance reduce to £500, while the savings allowance does not apply to those earning more than £150,000.

Tax on savings income in excess of available allowances will be paid at your marginal rate of income tax.

Individuals in receipt of dividends from companies pay no tax on the first £2,000 of dividends.

The dividends allowance sits on top of the personal allowance to give a potentially tax-free threshold of £13,850 in 2018/19.

Any dividend income exceeding available allowances sees basic-rate taxpayers pay dividend tax at 7.5%, higher-rate taxpayers at 32.5%, and additional-rate taxpayers at 38.1%.

Foreign income

A few of our clients live and work abroad, and those earning a wage overseas may have to pay income tax to HMRC. Whether or not they pay depends on their residence for UK tax purposes, which we can determine for you.

Income in this context consists not only of wages but also any investments held abroad, interest on foreign savings or rental income from a property owned in another country. Income from overseas pensions may also need to be reported.

Our residency service can assist with any queries you may have in regard to foreign income.

Failure to declare income is classed as tax evasion, and could result in up to seven years at Her Majesty’s pleasure or an unlimited fine.

If you receive income from any of these sources and do not currently declare it, you have plenty of time to get in touch and comply with HMRC rules.