If you are usually required to submit a Self Assessment tax return, then we may have some exciting news for you…

HMRC has announced that from this tax year (2023/24) onwards, the Self Assessment threshold for PAYE taxpayers will increase, reducing the administrative burden for a large number of individuals.

Currently, individuals who earn over £100,000 PAYE income are obligated to submit a Self Assessment Tax Return. However, when the deadline comes around for the 2023/24 tax year, the threshold will be increased to £150,000. 

It’s important to note that taxpayers who earned between £100,000 and £150,000 for the 2022/23 tax year will still be required to submit a Self Assessment tax return by 31st January 2024. Following this deadline, you will receive a Self Assessment exit letter from HMRC, unless you satisfy other aspects of the criteria.

 

What is the criteria?

Aside from PAYE taxpayers earning over £150,000 (currently £100,000), there are several other criteria which may mean you are required to submit a Self Assessment tax return. These are:

• if you are self-employed as a sole trader and earned more than £1,000 (before claiming tax relief); and 
• if you are a partner in a business partnership.

You may also have Self Assessment obligations due to other untaxed income, such as:

• COVID-19 grants or support payments
• money from renting out property
• tips and commissions
• income from savings, investments and dividends
• foreign income.

If you are expecting to receive a Self Assessment exit letter, but haven’t yet, then you must inform HMRC. If they agree that this is the case, then they will confirm via post.

 

Something to consider…

Although the threshold increase will be welcomed by a number of taxpayers, you should consider whether it could be beneficial for you to continue filing a Self Assessment tax return. 

For individuals who are subject to the tapered personal allowance between £100,000 and £125,140, filing a Self Assessment tax return could prevent them from overpaying or underpaying tax. Various complexities can cause small changes in an individual’s income, which could influence the rate of income tax that they are subject to, if reported on a tax return.

 

Deadlines and penalties

This is also a welcome opportunity for a reminder about the Self Assessment deadlines. There are strict penalties for late returns, so it’s important to make sure that you’re prepared for the following dates:

• 5th October 2023 – Register for Self Assessment if you’re self-employed or sole trader, not self-employed, or registering a partner/partnership.
• Midnight 31st October 2023 – Paper tax returns.
• Midnight 31st January 2024 – Online tax returns.
• Midnight 31st January 2024 – Pay the tax you owe.

 

If you would like to discuss your Self Assessment tax return obligations further, please don’t hesitate to get in touch with the team on 01942 816 512, or via email:

Chris Barlow, Tax Manager: [email protected]

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