Completing a Self-Assessment tax return may be necessary, even if you pay all your taxes through PAYE. High earners, in particular, need to be aware of the income thresholds that determine whether they are required to file a tax return. In this article, we’ll explore the criteria for filing a tax return, important deadlines, and various reasons that may necessitate the completion of a Self-Assessment.
Income Thresholds and Deadlines
For the 2022/23 tax year and earlier, individuals with income exceeding £100,000 were required to file a Self-Assessment tax return. However, starting from the 2023/24 tax year, this threshold is increased to £150,000. Unless there are other reasons for filing a tax return, individuals with income between £100,000 and £150,000 will need to file a return for 2022/23 but not for subsequent tax years. The deadline for filing the 2022/23 tax return online is 31 January 2024. It’s essential to meet this deadline to avoid a late filing penalty of £100, even if no tax is owed.
Reasons for Filing a Tax Return
Even if your income is below the Self-Assessment trigger threshold, you may still need to file a tax return for various reasons. These include:
- Earning more than £1,000 from self-employment or being a partner in a business partnership.
- Receiving rental income exceeding £1,000.
- Receiving dividends surpassing the dividend allowance.
- Earning taxable interest.
- Having foreign income to report.
- Realizing chargeable gains during the tax year.
- Being liable to pay the high-income child benefit charge.
Changes to Additional Rate Threshold and Savings Allowance
Note that starting from 2023/24, the additional rate threshold has been reduced to £125,140. If your income falls between £125,140 and £150,000, you will no longer qualify for a personal savings allowance. Consequently, any savings interest (excluding tax-free wrappers like ISAs) will be taxable, requiring reporting to HMRC.
If you believe you no longer need to file a Self-Assessment return due to income falling below the new threshold, or if you have retired with no additional reporting requirements, it is essential to inform HMRC. You can accomplish this online, using HMRC’s digital assistant or completing an online form. Alternatively, you can notify HMRC via mail or phone (note that the Self-Assessment helpline is closed until 4 September).
Understanding whether you need to complete a Self-Assessment tax return is crucial, even if your taxes are primarily paid through PAYE. High earners need to be aware of income thresholds and associated deadlines to ensure compliance. Additionally, various circumstances may necessitate the filing of a tax return, even if your income falls below the threshold. By staying informed, meeting obligations, and notifying HMRC of any changes, you can effectively manage your tax responsibilities and avoid penalties.
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