HMRC Self-Assessment Threshold Changes for 2023/2024: What You Need to Know
Starting from the 2023/2024 tax year, the self-assessment threshold for taxpayers has increased to £150,000, provided your only source of income is through PAYE. This means that you are required to submit a self-assessment tax return for 2023/24 only if your income exceeds £150,000 or you receive income from other sources.
Other sources of income include, but are not limited to:
- Self-employment income over £1,000
- Dividends
- High-income Child Benefit
- Rental income
What About the Personal Allowance?
Unfortunately, the increase in the self-assessment threshold does not affect the loss of your Personal Allowance. You will still lose eligibility for the Personal Allowance once your earnings exceed £100,000. Specifically, for every £2 you earn over £100,000, you lose £1 of your tax-free Personal Allowance. When your income reaches £125,140 or above, your Personal Allowance is completely eliminated. This effectively adds an extra 20% tax on income earned between £100,000 and £125,140.
Important Notice
If you receive a notice from HMRC advising you to submit a 2023/24 tax return, but you believe you no longer meet the criteria for filing, it is crucial to contact HMRC to inform them of your circumstances. Failing to submit a return by 31st January 2025 or failing to inform HMRC that you no longer meet the criteria will result in a penalty for non-submission.
You can contact HMRC at 0300 200 3310.
Looking Ahead to 2024/2025
From the 2024/2025 tax year onwards, you will only need to file a return if your income comes from multiple streams. If you earn £150,000 or more and all of this income is from PAYE, you will no longer be required to file a tax return!
This change aims to simplify the tax process for high-income earners whose income is solely from PAYE, reducing the administrative burden and allowing HMRC to focus on more complex cases.