Tax return Question / help

[ben4watches]

Earlier last year I registered for self assessment as I have been doing some part time Taxi driving, this is my sole income if it matters.

Now, My mother passed away last year and I received a fair chunk of cash from her estate (total estate was below inheritance threshold) so do I have to declare it it on my 2017-2018 return which I am about to submit? Some have said yes, some have no, so if you knowledge on the subject it would be great.

Also, the house will be sold in a few weeks which again net me a few quid, agin will I have to declare on next years 2018-2019 return.

One other question, I earn very little as a Taxi driver, mainly because I only do a few days a week so my earnings will be well bellow the threshold to pay any tax which leads me a slightly related concern.

I have quite a few quids worth of watches and being known to flip a few worry that if I sell one or two the tax man will ask me where the money has come from and see it as an income and tax me accordingly.

Obviously I keep a record of my earnings for driving (all paid as cash through a local taxi firm and I get a paper record of my income) but dont use a separate bank account as I don’t pay any money into my account as its just spending money really.

Can / or will the inland revenue have access to my bank account to see what’s going in and out to accertain the validity of my tax return.

Actually a few questions but never done this before and unsure of what to expect when I do my first return.

[David_D]

Doubt you have a problem on any of your questions. If you made a gain on the disposal of your mother’s property (compared to the probate value) it might breach your capital gains allowance (£11,000?). That’s probably unlikely if you are selling straight away.

If you have a few £ now, I think it would be money well spent to have a chat with an accountant. Get a recommendation from someone you trust. They don’t cost the earth and keep you the right side of the law and ensure you don’t pay too much tax.

Edit: your inheritance shouldn’t be taxed and I’m not aware of it needing to be reported.

HMRC do have access to bank records and the best advice is always to keep records of incomings and outgoings to show the source and use of funds. It’s particularly important if you don’t run a separate business bank account and are in a cash type of business.

[Tifa]

No tax due on inheritance under IHT threshold.
Nothing to declare.
Interest/gains from poceeds may be taxable next year.
Speak to an IFA who should be able to put some sort of tax efficient strategy in place.
If done correctly, will pay for itself.

[David_D]

my earnings will be well below the threshold to pay any tax which leads me a slightly related concern.

I have quite a few quids worth of watches and being known to flip a few worry that if I sell one or two the tax man will ask me where the money has come from and see it as an income and tax me accordingly.

I responded from my phone earlier. Just reading your Q again, I think you do need to make sure that you have good records. If I read it correctly, you have an income ("well") below the personal allowance (this year, £11,850) but have some valuable watches. Obviously there is nothing wrong with that provided you can give an account of your incomings/outgoings which is consistent with your lifestyle (now and historically). If you don't, HMRC can put 2 + 2 together and make 37 - and the onus is then on you to disprove.

[ralphy]

Excellent advice from David_D there, Ben.

R

[David_D]

Excellent advice from David_D there, Ben.

R

Cheers! Nice to be appreciated!

[Brighty]

There's a question on a self assessment something along the lines of 'income from estates', i think. I remember my brother asking if we needed to declare our inheritance there. You don't, Inheritance below IHT limits is tax free, the question relates to income from rent or interest etc in an as yet distributed inheritance estate and not the inheritance itself, so income, not i heritamce. As others have said, you will need to declare any difference in house value on probate and sale price as a capital gain, but you have an £11k allowance before its taxable.

[ben4watches]

Thanks for the input guys, most appreciated.