It’s been confirmed by HMRC that from the tax year 2023-2024 onwards, the self-assessment threshold for taxpayers who are taxed through PAYE, will change from £100,000 to £150,000.
If you’re a taxpayer affected by this new threshold- earning between £100,000-£149,999, you’ll still need to complete a self-assessment for 2022-2023 period as the threshold was still £100,000.
So, to outline what you need to do if you are one of the taxpayers affected by this increase, or if you aren’t within the threshold but still need to fill in a self-assessment, we’ve asked one of our terrific Tax Managers, Josh Draycott to explain why the threshold has increased, and how to know if you need to submit a self-assessment, despite not being within the new threshold.
Over to Josh…
As said above, from the tax year 2023-2024 onwards, the self-assessment threshold for taxpayers who are taxed through PAYE only, is changing from £100,000 to £150,000.
The self-assessment threshold for 2022-2023 remains at £100,000, so no urgent action is needed for now, but it’s always better to plan ahead- especially when tax is involved!
Below I’ve given a brief outline of what a tax self-assessment is and why the threshold has changed, as well as a short summary of the criteria in which a tax return needs to be submitted, even if you earn below £150,000.
So, what is a self- assessment?
The most important thing to know about a self-assessment tax return is that it is not tax – it’s a way of paying tax. It’s simply how you are able to let HMRC know about your taxable income.
The self-assessment comes with the idea that you are responsible for completing a tax return each year, and paying any tax that is due for that tax year. It’s just purely a process to work out how much tax you owe.
Changes to the threshold
Announced in the Agent Update in May 2023, the income threshold whereby individuals need to fill out a self-assessment form has now increased. If you earn £150,000 or more during the 2023-24 tax year and onwards, even if all of your income is taxed by PAYE, you will need to ensure you have filled out and submitted a tax return no later than 31st January following the end of the tax year.
If you previously were within the threshold, you will receive a self-assessment exit letter if you submitted a 2022 to 2023 return, which showed income between £100,000 and £150,000 taxed through PAYE, and you do not meet any of the other criteria for submitting a self-assessment return.
How to know if you still need to submit a self-assessment
If you aren’t earning above the new threshold, but your income is still taxed through PAYE, you’ll still need to submit a self-assessment tax return if you meet one of the additional criteria. These include:
- Receipt of any untaxed income
- Partner in a business partnership
- Liability to the High Income Child Benefit Charge
- You are a self-employed individual with a gross income of over £1000
We are here to help
If you have been affected by the changes to the self-assessment threshold, or are looking for some tax advice, we can help. To speak to one of our specialist Tax Advisors, please email info@djhmittenclarke.co.uk
