The Self-Assessment Threshold has increased for the 2023-2024 Tax Year
Anyone earning £150,000 or more via PAYE during the tax year 6th April 2023 – 5th April 2024 must complete a self- assessment tax return.
This has increased from the previous £100,000 threshold.
If you submitted a tax return for the 2022/2023 tax year showing you earned between £100,000 and £150,000 then HMRC may have already sent you an exit letter for automatic de-registration.
However, although you will be able to claim some expenses via your tax code, be aware, it may still be beneficial for you to submit a self-assessment tax return.
Please note that your personal allowance will still go down by £1 for every £2 that your adjusted net income is over £100,000. This means that your allowance is Zero once your income is above £125,140. It is advisable to check your tax code and ensure that your personal allowance has been restricted accordingly.
Two examples of where you might want to consider submitting a tax return voluntarily are:
Pension Uplift If you make private pension payment or one-off payments.
Gift Aid Relief One off relief on gift aid. (Note: you can do this through you tax code but you must have contacted HMRC in the first instance to tell them about the donation).
- Pension
- you pay Income Tax at a rate above 20% and your pension provider claims the first 20% for you (relief at source).
- Your pension scheme is not set up for automatic tax relief.
- someone else pays into your pension.
If you’re paying in an amount greater than £10,000, you’ll need to contact HMRC to claim the tax relief.
If you pay Income Tax above 20% in England, Wales & Northern Ireland you can claim additional tax relief on your self-assessment tax return for money you put into a private pension of:
- 20% up to the amount of any income you have paid 40% tax on
- 25% up to the amount of any income you have paid 45% tax on
Example:
You earn £60,000 in the 2024 to 2025 tax year and pay 40% tax on £10,000.
You put £15,000 into a private pension.
You automatically get tax relief at source on the full £15,000.
You can claim an extra 20% tax relief on £10,000 (the same amount you paid higher rate tax on) through your self-assessment tax return.
If you pay Income Tax above 20% in Scotland you can claim additional tax relief on your self- assessment tax return for money you put into a private pension of:
- If you pay Income Tax above 20% in 1% up to the amount of any income you have paid 21% tax on
- 22% up to the amount of any income you have paid 42% tax on
- 25% up to the amount of any income you have paid 45% tax on
- 28% up to the amount of any income you have paid 48% tax on
If your pension scheme is not set up for automatic tax relief, you can claim tax relief in your self-assessment tax return.
- Gift Aid Relief
If you are a higher rate tax payer you can claim back the difference between the tax you’ve paid on the donation and what the charity got back when you fill in your self-assessment return.
Example:
You donate £100 to charity – they claim Gift Aid to make your donation £125. You pay 40% tax so you can personally claim back £25.00 (£125 x 20%).
With Payroll Giving, you do not pay the difference between the higher and basic rate of tax on your donation.
Getting tax relief sooner using your tax return
In your self-assessment tax return, you normally only report things from the previous tax year.
But for Gift Aid, you can also claim tax relief on donations you make in the current tax year (up to the date you send your return) if you either:
- want tax relief sooner.
- will not pay higher rate tax in current year, but you did in the previous year.
You cannot do this if:
- you miss the deadline for submission of your self-assessment tax return (31 January if you file online, or 31 October if you file by post).
- your donations do not qualify for Gift Aid – your donations from both tax years together must not be more than 4 times what you paid in tax in the previous year.
If you receive Married Couples Allowance
Your tax-free allowance may increase if you make donations through Gift Aid and claim Married Couple’s Allowance.
If you fill in a self-assessment tax return your allowance will be adjusted automatically if it needs to be.
More about the Self-Assessment Threshold
The majority of people who are taxed through PAYE only don’t need to complete a self-assessment tax return.
However, if you earn more than £150,000 you are legally obliged to complete and file a return.
When did the threshold increase?
The threshold increased from £100,000 to £150,000 for the 2023-24 tax year and beyond.
What happens if previously submitted a tax return but am now below the threshold?
If you submit a tax return for 2022-23 that shows you earned between £100,000 and £150,000 via PAYE, in most cases HMRC will send you a self assessment registration exit letter.
Exceptions?
If you earn less than £150,000 via PAYE and you don’t meet any other self-assessment criteria, you won’t need to submit a tax return.
Other Criteria?
- Have income over £1,000 from self employment
- Have untaxed income
- Income from rental properties
- Commission
- Savings income
- Investments and dividends income (eg.Directors Dividends)
- Foreign income
- Are a partner in a business partnership (or LLP).
- Are liable for the High Income Benefit Charge.
What do I need to do?
If you were previously registered for self-assessment but no longer need to complete a tax return because your PAYE earnings below the self-assessment threshold, HMRC will write to you.
If you are unsure whether you need to submit a self-assessment tax return, please contact us. We are happy to help.
