SAM100050 - Records: set up taxpayer record: criteria for a PAYE / SA record

During day to day work an SA record is required for a year where

  • The latest employment, Job Seekers Allowance, or Incapacity Benefit claim, or Occupational pension is live

And one of the following criteria is present

  • The following indicator is set
    • DIR - other than exempt directors. There are some directorships where tax returns do not need to be completed for the reason of the directorship alone. Provided that their tax affairs do not otherwise require completion, returns will not be required from directors of companies which are set up for charitable purposes, or that are neither profit making nor trading and that do not make payments in any way or provide any company benefits for the directors.
Examples:
Directors of Community Amateur Sports Clubs (CASC)
Directors of companies set up by tenants to manage freeholds
Nominal directorships (for example school governors)
Where they otherwise qualify to do so, based on other income and amounts, relevant directors can complete a Short Tax Return (SA200) rather than a Main Tax Return (SA100)

Or 

  • The total taxable income (including benefits and so on), before allowances are set off, exceeds £100k. Note: No signal is set on NPS to identify these cases

Or 

  • The latest coding contains
    • Any expenses or professional subscriptions in excess of £2500 
    • Other earnings from part time earnings, other income (not earnings) commission, untaxed interest, income from property, tips, public service pension, occupational pension, forces pension or personal pension annuity individually are in excess of £2500 
    • Higher Rate Adjustment is in excess of £5625 

Notes: 

1. The reconciliation of all years on PAYE, prior to the case being set up in SA, should be dealt with in accordance with PAYE93095
2. If the total expenses claimed are £2500 or more the case should be set up on SA (or the SA record reactivated, if dormant) for the year to which the expenses claim relates. If the claim is for CY, update the SA record so that an SA tax return will be issued in April. If the claim is for a year earlier than CY and a return has not already been issued, issue one now
3. An SA return is not required where the taxpayer is a pensioner and the additional liability can be recovered by means of a coding restriction (where form P810 would be issued instead)
4. Where the taxpayer is in receipt of income from self employment shown on a self employment page but included in their code number, there will always be a requirement for the taxpayer to submit an SA return even if the income is below £2500
5. If the gross income exceeds £10,000 irrespective of the amount of expenses to be set off, an SA record is required. For example, gross income from property of £11,000 less expenses of £9,500 gives a net income of £1,500 to be included as a deduction in the code - an SA record is required
6. If a loss arises on income from property and gross income is less than £10,000, or Rent A Room income is below the exempt amount, an SA record is not required. Note: If the taxpayer is unable to provide details regarding a new source, an SA record is required
7. Where the taxpayer is a UK resident seafarer and wishes to claim Seafarers Earnings Deduction (SED) they can register for SA and make their claim on the SA return. Those seafarers who are non-UK residents and wish to claim SED must do so on form R43M and should not be set up in SA

Other circumstances

  • In receipt of income from self employment or partnership (partnership returns will also be required)
  • A company director - other than exempt directors
  • A minister of religion (of any faith or denomination)
  • In receipt of untaxed income of £2500 or more (some pensioners may be able to pay the tax on this through their PAYE coding)
  • Non-resident landlords
  • In receipt of taxable foreign income even if claiming that they are not normally resident in the UK (including non resident company landlords). If however the foreign income is less than £300 and consists solely of foreign dividend income and the taxpayer does not meet any other criteria for SA, there is no requirement for the taxpayer to complete SA returns
  • In receipt of income from the letting of property or land (if net income is less than £2500 a year they may be exempt unless part 4 of notes above applies). See also Note 4 and 5 above regarding gross income, losses or exempt amounts
  • Name or member of Lloyds
  • In receipt of savings or investment income (from which tax has been deducted) of £10,000 or more (before tax)
  • In receipt of (or treated as received) income from a trust or settlement or any income from the estate of a deceased person, and further tax is due on that income
  • In receipt of unauthorised payments from a pension scheme which are liable to a tax charge, including those payments which are liable to unauthorised payment surcharge
  • Makes a claim for repayment of tax deducted from sick pay refunded to the employer, when in receipt of compensation for loss of earnings due to injury at work which covers that sick pay. Note: This will apply only for a closed year where refund is made in the following year
  • Makes a claim for Community Investment Tax Relief, Enterprise Investment Schemes or Venture Capital Trust
  • Expats

Where the EXPAT signal is set and

  • The taxpayer is working wholly, or partly, in the UK for a UK resident employer, on assignment, while remaining employed by an overseas employer, or
  • The taxpayer is assigned to work wholly, or partly, in the UK at a recognised branch of their overseas employers business
  • All individuals included by an employer within a dedicated expatriate scheme
  • All individuals included by an employer within an expatriate modified PAYE scheme
  • Entitled to reduced age-related allowance
  • From April 2011 those individuals with an annual allowance pension charge

Note: There are circumstances when reduced age-related allowance can be dealt with outside SA as follows

  • Where the taxpayers only source of income is one PAYE source and State Pension which is within the DWP up-rating service
  • Where the taxpayer has reduced age-related allowance and apart from one type of payment or expense that affects their estimated income, you may on request from the taxpayer deal with the case outside SA. However you must ensure that procedures are in place to check the figures where the payment or the expenses are not a constant figure
  • Capital Gains

An SA return should be completed together with the Capital Gains pages where the individual has capital gains to pay

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