HMRC Filing Exclusions and Special Cases 2022/23

Article ID: 3293
Last updated: 30 Nov, 2023

HMRC Filing Exclusions 2022/23

Exclusions have arisen due to the previous introduction of additional allowances and bands for certain types of income, making the calculation of the tax liability more complex. HMRC systems expect our software to match their method of calculation in order for the returns to be filed electronically. However, the legislation states that HMRC should deduct the reliefs and allowances in the way which will result in the greatest reduction in the taxpayer's liability to income tax and this is not always the case in their methodology.

Whilst some of last years' issues have been corrected by HMRC, some remain and some have also been added. Consequently, our software may not provide the correct calculation and for most scenarios affected, before filing, TaxCalc will identify the exclusion number and provide instructions on how to deal with the return.

HMRC Exclusion List 2022/23 - Individuals

HMRC Exclusion List 2022/23 - Partnerships

HMRC Exclusion List 2022/23 - Trusts

HMRC Special Cases 2022/23

Special Cases represent issues that HMRC have identified as requiring a workaround in order to prevent a filing rejection. Where possible, we have taken care of these workarounds within the software or have provided a message before live filing to advise how to deal with the workaround. There are limited scenarios where a paper return will need to be filed. Some examples of special cases are:

  • Where additional documents must be sent with the return and the file size exceeds 5mb.
  • If you attempt to submit more iterative boxes than allowed.
  • Where the return contains Multiple Chargeable Event Gains.
  • If you have an Individual return with more than one accounting period.

Before filing, TaxCalc will identify the Special Case number and provide instructions on how to deal with the workaround.

HMRC Special Cases List 2022/23

Should paper filing be required, to print your tax return with a Reasonable Excuse form attached:

  1. Within SA100 go to Check and Finish and select Print.
  2. Within Printing Preferences, select HMRC (official return pages to file by post) within Who is it for? This will ensure that the reasonable excuse form is ticked.
  3. At the bottom of the screen you will see a 'Click here' to enable the entries to be made on the Reasonable excuse form.
  4. Click Close once completed.
  5. Preview to check pages.
  6. Hover the mouse over the return to see the Print options.

Exclusions not identified within TaxCalc

There are some exclusions which we have not included within the software. This is due to either outstanding queries with HMRC on the specific criteria to capture the relevant scenarios or the circumstances in which the issue arises is considered to be rare. A paper return, along with a reasonable excuse form should be filed for returns affected by the following scenarios:

HMRC Reference

Key factors

Description

124

  • Non-UK residents
  • Partnership loan written off

Non-UK residents who belong to a partnership, which has written off or released an amount from a company loan (treated as income), may be affected. If the individual also receives a dividend which has an associated notional tax credit, it is currently being offset against the write-off income incorrectly.

135

  • Dual or non-UK residents claiming partial relief from UK tax
  • Property finance cost relief

When partial relief from UK tax is being claimed on either savings and/or dividends and relief for residential finance costs is also being claimed, the finance costs relief may be too high. This is due to the savings and dividend income being included as non-savings income within the calculation of adjusted net income.

138

  • Pre-incorporation losses being claimed

  • Total loss relief claimed exceeds £50,000

The pre-incorporation losses will be included in amounts to be restricted by the £50,000 whereas they should be excluded from the cap. As well as restricted relief, this will impact the calculation of net adjusted income so could affect other allowances.

139

  • Chargeable event gains

  • Total income within the higher rate band but additional rate tax being charged on some income

Additional rate tax will be charged if the total taxable income is within £500 of being within the additional rate band. This is due to the amount of higher rate band available being reduced by £500 due to an incorrect calculation involving the personal savings allowance.

140
  • Life insurance policies held for more than one year

  • Top Slicing Relief(TSR) is due

  • The personal savings allowance and/or the starting rate for savings would increase in the annualised gain calculation

HMRC have reviewed the TSR calculation and accept that the personal savings allowance and starting rate for savings amount should be recalculated in the TSR computation, based on the annualised gain. The current calculation does not always allow for this, despite allowing for a change to the personal allowance.

141

  • Non-UK residents

  • Income limit reached for High Income Child Benefit Charge (HICBC)

The HICBC is currently being included within the non-UK resident tax liability. The non-UK resident tax liability should only include income tax that would otherwise be charged on disregarded income.

142

  • Income falls within the higher rate

  • Non-savings income is less than the personal allowance and starting rate for savings

  • Savings and dividend income present with

The personal allowance is not allocated in the most beneficial way. It will be allocated wholly to the non-savings income when it would be more beneficial to allocate some to the dividends (the excess over the dividend nil rate).

143
  • Non-UK residents

  • Dividend income from UK estate taxed at 7.5% (box TRU18.1)

The dividend income is not being disregarded for the purpose of the non-resident tax calculation (s811), therefore tax is overstated.

144

  • Benefit from pre-owned assets income (INC20)

  • Earlier year losses (AIL1) present

The earlier year losses and incorrectly being offset against income from benefit from pre-owned assets.

145

  • Notional tax due

  • Tax charges present such as:

    • Child benefit

    • Pension charge

    • Gift aid charge

The charges are currently not being reduced by notional tax owed, whereas they should be.

Looking for exclusion and specials links to earlier years?

HMRC Filing Exclusions and Special Cases 2019/20

HMRC Filing Exclusions and Special Cases 2020/21

HMRC Filing Exclusions and Special Cases 2021/22

Article ID: 3293
Last updated: 30 Nov, 2023
Revision: 15
Views: 1093
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folder Tax Return Production -> SA100 Individual Return