Income tax guide for self-employed professionals in UK
Income tax guide for self-employed professionals in UK Surveys have shown that a great number of self-employed (liberal) professionals are not registered with the Tax Administration and fail to submit their tax declarations as required under existing laws and regulations. In addition, many declarations submitted by self- employed professionals contain a considerable number of errors. The most important reasons for nonobservance of the tax laws by self-employed (liberal) professionals is that many of them have insufficient knowledge of the income tax system and its procedures, including ignorance of what incomes are taxable, exemptions, abatements, methods of assessing applicable tax, in addition to other essential information.
Consequently, a taxpayer who ignores the basic information or possesses erroneous information on tax impositions or avoids resorting to the Income Tax Department to obtain the required information will be liable to fines that could have been avoided had she/he been aware of this information. In its endeavor to build a closer, clear and transparent relationship between the government and citizens, the Ministry of Finance has prepared this simplified user-friendly guide that aims to:
- Explain the relationship between the citizen and the Tax Administration involved in implementing the Income Tax Act described in this guide.
- Familiarize citizens with the simplified ways and means of completing their income tax declarations, particularly if they choose to complete them by themselves.
- Clarify any consultations with the Tax Administration that may be required and simplify procedures to save time and avoid fines or penalties.
- This guide is addressed to every self-employed (liberal) professional whether affiliated to a syndicate/order or not. It is also addressed to those preparing to start practicing a profession, with the aim of guiding them with regard to their rights and obligations. The procedure starts with informing the
- Tax Administration directly upon commencement of work and seeking guidance concerning the methods of proper book-keeping, income tax assessments and declarations, statutory deadlines and procedures for tax settlement, fines imposed for delays or non-settlement and other violations that can be avoided. In addition, this guide offers information concerning procedures for objecting to taxes and other related matters.
- The clarification of procedures for dealing with the Income Tax Administration will encourage taxpayers to submit their declarations directly without resorting to third parties, if they so wish. The Tax administration will also help them comply with the law, complete their transactions quickly, more efficiently and at lower costs. This is one of the objectives of the Ministry of Finance concurrent to its efforts to enhance transparency at its various departments whereby people will come to know their rights and obligations, thus saving time, avoiding errors, problems and unnecessary fines.
- The Ministry of Finance has pledged to review its guides regularly.
- This pledge shall be fulfilled, as necessary, in order to develop this guide and our other publications whenever fundamental legal amendments are introduced or new implementation procedures adopted.
To whom is this guide addressed?
- To every self-employed (liberal) professional
- Who is a self-employed (liberal) professional?
- Any person residing in UK,
- Lebanese or non-Lebanese,
- Practicing a free profession on Lebanese territory,
- That generates a taxable income,
- Which shall be imposed on the total income earned by the self employed (liberal) individual in UK?
What is a free profession?
Every profession that generates for its practitioner a non-commercial, non-industrial income or handicraft income
What does the word “taxpayer” mean?
The contributable or taxpayer, in the context of this guide, is the person who practices a profession that generates a taxable income.
The taxpayer : the person required to declare and pay a tax. When will a self-employed (liberal) professional become a “contribuable” or “taxpayer”?
- When affiliated to a syndicate/order, in case this is mandatory (lawyers, engineers,doctors, etc).
- Or upon the start of any actual work, i.e.upon commencement of practicing a profession.
- What are the duties of the self-employed (liberal) professional?
- To inform the Tax Department of her/his activities as soon as the professional commences practicing these activities.
- To keep proper records.
- To conduct self-assessment or auto -declaration of taxes due and settle them.
- To submit a tax declaration to the Income Tax Department within the
- Statutory deadlines.
- To inform the Tax Department of any modifications on the professional tax Status.
The information given in this guide is derived from:
- The provisions of the Income Tax Act issued by Decree No. 144, dated June 12, 1959 and its amendments.
- The provisions of the Direct Tax Collection Act issued by Decree No. 147, dated June 12, 1959 and its amendments.
- Related circulars, decisions, memoranda and instructions issued by the Ministry of Finance.
The principle on which this guide is based:
The chronological principle was adopted in the preparation of this guide:
- The date starts when the taxpayer obtains a license to practice the stated profession or commence work.
- This is followed by preparing the proper accounting books, their official endorsement, methods of keeping them, annual tax declarations, verification by the Tax Administration, imposition of additional or supplementary taxes and determination of the of tax settlement methods.
- The procedure then covers the closure or transfer of ownership of the work location or office.
- Finally, this guide clarifies the taxpayer’s right to object to the amount of the taxes imposed.
The following pages contain a number of legal and accounting terminologies that may be difficult for some readers to understand fully. In this case, the citizen is requested to contact the Ministry of Finance by phone, mail or e-mail or proceed to the Taxpayers’ Service Unit attached to the Income Tax Department.