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Isle of Man IM1 3TX
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Income tax returns are normally issued shortly after the end of the relevant tax year on 5 April for individuals or partnerships and after the end of the relevant accounting period for companies. If a return form has not been received, the Income Tax Division should be contacted.
The normal date for submission of income tax returns for individuals and partnerships is 6 October following the end of the relevant tax year while for companies it is 12 months after the end of the relevant accounting period.
All self-employed income or company profits must be declared on the return and should be supported by the C11 and C14 forms received from contractors (see “What are my obligations as a subcontractor”), together with self-employed or company accounts.
Failure to submit an income tax return on time could result in a late return penalty.
Income tax and Class 4 National Insurance for self-employed individuals are usually subject to the “payment on account? system. This means that a subcontractor may receive a payment on account request which will be due for payment on 6 January in the year of assessment.
However, once the subcontractor has submitted their tax return and accounts for that tax year, they will receive both a tax and a Class 4 National Insurance assessment showing their total liabilities for the tax year and any balance that remains due.
If a subcontractor has not held a valid tax exemption certificate during the tax year, any tax that has been deducted by the contractor will be credited against their income tax assessment. Any credit will be refunded and any outstanding amount will be due and payable on 6 January following that tax year, or within 30 days of the date of the assessment, whichever is the later.
Please note that subcontractor tax deductions are always credited to the year in which they are deducted.
If a subcontractor has held a valid tax exemption certificate during the tax year, they may not have had any tax deducted to offset against their income tax and Class 4 National Insurance assessments. In this case, it is important that they set money aside on a regular basis so that they can pay the tax and Class 4 liabilities as they become due and payable.
To assist in meeting their liabilities, subcontractors can choose to make payments to the Division in advance of their tax assessment or payment on account request being issued. Further information and standing order details can be obtained by contacting the Division.
Interest can be charged on overdue income tax and Class 4 National Insurance. Therefore, it is important that any liabilities are paid by the due date.
If the individual’s tax return is not sent in on time, an estimated assessment may be issued and any liability shown will be payable within the same time limits. A penalty for late submission of the return may also be raised.