Tax return requirement rises to £150k

June 21st 2023

To limit the number of self-assessment (SA) returns HMRC has to process it has changed the criteria for when one is required. If HMRC removes you from SA as a result, should you agree with this? Head of Tax Christiaan Hansen discusses.

For 2023/24 and later tax years the self-assessment (SA) income threshold at which HMRC will require you to complete an SA tax return is £150,000 (instead of £100,000). Sounds simple but other criteria must be met before you can escape the SA net.

If any of the following apply HMRC will include you in SA:
• Receipt of untaxed income
• Being self-employed with annual income exceeding £1,000
• Liability to the high income child benefit charge

In fact, there are many other reasons why you may need to submit an SA tax return even if your income is below the threshold.

Whether or not you meet the criteria for SA you must complete a tax return if HMRC sends you a notice to do so, either in writing or electronically. However, if you don’t meet the criteria you can ask HMRC to take you out of SA retrospectively.

Not having to complete an SA return form each years sounds like good news, but it comes with two risks.

1. If for any reason you have an income or capital gains tax liability, you’re required to tell HMRC about it, in writing, by no later than the 5 October following the end of the tax year, i.e. for 2023/24 that’s 5 October 2024.

2. HMRC may not correct inaccuracies in your tax code. In fact, it’s often responsible for creating them. This means small under or overpayments of tax may go on for years. HMRC will ignore these. While you might not get worked up about missing out on a tax refund of, say, £20, how would you feel if it continues for ten years? The solution is to carefully check that HMRC has calculated your tax code correctly.

It’s OK to be outside of SA but if you are you need to keep a closer eye on changes to your tax code. You also need to notify HMRC by 5 October if you owe tax for the previous tax year, or you could be charged a penalty.

For other self assessment and tax related queries please contact the team directly.