Self-assessment threshold – what you need to know

Most people who are taxed through PAYE only don’t need to complete a Self-assessment Tax Return. However, until a few years ago, if you earned more than £100,000 in this way, you were legally obliged to file a return. This Self-assessment threshold was then raised to £150,000.

What is the Self-assessment threshold?

Anyone earning £150,000 or more via PAYE must complete a tax return.

When did the change come into force?

The change in the threshold from £100k to £150k came into force for the 2023-24 tax year and applies to subsequent tax years.

What happens if I no longer earn more than the threshold?

In most cases HMRC will send you a Self-assessment exit letter.

Are there exceptions?

As long as you earn less than £150,000 via PAYE and you don’t meet any of the other Self-assessment criteria, you won’t need to submit a tax return.

What are the other criteria for Self-assessment?

There are quite a few criteria that determine whether you need to complete a Self-assessment Tax Return. You will need to submit a return if you:

• Have income over £1,000 from self-employment
• Have any untaxed income
• Are a partner in a business partnership
• Are liable for the High Income Child Benefit Charge

When it comes to ‘untaxed income’, you may have to register for Self-assessment if you receive:

• Income from renting out a property
• Tips and commission
• Income from savings
• Income from investments and dividends
• Foreign income

So, for example, if you earn between £100,000 and £150,000 via PAYE, but also have income from a buy-to-let property, you’ll still need to submit a tax return.

If you are unsure whether you need to submit a tax return, feel free to consult a THP accountant. Alternatively, you can use HMRC’s online tool: Check if you need to send a Self-assessment Tax Return.

Can I voluntarily send in a Self-assessment Tax Return?

If you don’t need to complete a Self-assessment Tax Return, there’s little point in doing so. However, there are some additional reasons you may wish to complete one. These include:

• Claiming certain tax reliefs
• To prove you’re self-employed

You might need to do the latter to claim tax-free childcare or the maternity allowance.

What do I do if I no longer need to complete a tax return?

If you no longer need to complete a tax return because your PAYE earnings are no longer above the Self-assessment threshold, HMRC will write to you.

However, if you no longer need to complete a return for a different reason (such as retirement or ceasing to be self-employed), you need to tell HMRC. You can do this via the HMRC digital assistant, via your Government Gateway account, or by phone or post. (Note, however, that the Self-assessment helpline is closed during the summer months.

If you need any advice on Self-assessment, please contact your THP account manager. They are always happy to help you.