The Tax and Customs Administration sends out letters inviting you to report the actual return on your assets that are taxed under Box 3 (income from savings and investments). You will receive these letters yourself. They are not sent to your accountant or tax adviser, even if they have filed your tax return on your behalf.
Forward invitation letters to your accountant or tax adviser as soon as possible after you receive them! We will not take any action without that letter.
What action(s) should you take, and when?
- Wait until you receive one (or more) invitation letters from the tax authorities. Of course, if you wish, you can start gathering all the information needed to work out your actual return in the meantime. We have drawn up a list of the information required. You can find this list here.
- Forward any invitation letter to your accountant or tax adviser as soon as you receive it, so that they can take action in good time. The deadline for submitting the ‘Statement of Actual Return’ form begins on the date of the letter. This deadline is 12 weeks, unless your tax return was submitted using a BECON number (in which case the deadline is 26 weeks). If you receive the invitation as part of the (further) grounds for a submitted appeal, the time limit is, in all cases, only 12 weeks.
What do we do?
- Once we have received your invitation letter, we can carry out a quick assessment to determine, in broad terms, whether your actual return is likely to be lower than the taxed (flat-rate) return. Of course, in doing so, we will assess whether the expected costs associated with gathering the data and completing the form are less than the expected tax refund.
- If you agree with us that it is worth submitting the OWR form, you can instruct us to take care of this for you. We will then ask you to gather the information required to determine the actual return (see the list mentioned above) and send it to us.
No false hope
The Box 3 reform is attracting a great deal of attention. Nevertheless, we anticipate that many people will not be eligible for a reduction in income tax under Box 3. This is due to the specific rules that apply to determining the actual return.
- We must consider the total value of all assets in box 3 (not individual assets and liabilities).
- Value changes (realised and unrealised) count as actual returns (for residential properties, the value change is taken from the WOZ value).
- Costs should not be taken into account (but interest on debt should be).
- The return of loss years is not offset against that of years with a positive return.