Readers are reminded that HMRC have recently published the first version of the self-assessment online filing exclusions for 2017/18. This still includes two exclusions relating to dividend income (70 and 79) and top slicing relief (80 and 81).

Disappointingly, the list contains 12 new exclusions (numbers 79–90 inclusive). HMRC advise that paper returns be filed for the cases on this list. HMRC will then check manually that the tax calculation is correct. It would be good practice to include a note referring to the relevant exclusion in the white space of the self-assessment return.

Where a self-assessment return cannot be filed online for one of the exclusions, provided that a paper return is delivered on or before 31 January following the end of the tax year to which the return relates, HMRC will accept that the taxpayer had a reasonable excuse for failing to file a paper return by the normal 31 October deadline. A reasonable excuse claim should accompany the paper return.

According to HMRC, exclusion 70 has been partly fixed and affects fewer taxpayers in 2017–18. Exclusion 79 affects a small number of taxpayers. Exclusions 80 and 81 which relate to chargeable event gains and top slicing relief are retained in 2017–18 because “it was too late to make the necessary changes”. HMRC advise that exclusions 70, 79, 80 and 81 will be fixed for 2018–19.

HMRC have issued the following message regarding the exclusions for 2017/18:

“The updated Exclusion list for 2017–18 includes changes for Exclusion 87 and Exclusion 90.

We have given further consideration to Exclusion 87 for Pension Lump Sum and how an individual’s lump sum state pension payments are taxed relative to the way they make their personal pension payments. The outcome of this is that we should allow the extension of the basic/higher rate limits per s10(6) ITA 2007. The result is the SA tax calculator is correctly extending the basic rate band for 2017–18. However, the ‘income’ for the Pension Lump Sum should be determined without reference to the starting rate for savings, the savings nil rate (personal savings allowance), and dividend nil rate (dividend allowance).

The Exclusion 90 criteria has been updated to ensure we identify customers affected but do not identify those that are not.

We will issue an updated Exclusion document when we have identified the number of customers that will be affected by the Exclusions.”

END OF HMRC MESSAGE