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Self Assessment Changes – Threshold Increased to £150,000

20th June 2023

 

From the 2023/24 tax year onwards, the self assessment income registration threshold for taxpayers taxed through PAYE only will rise from £100,000 to £150,000.

HMRC will issue self assessment “exit letters” as from 2023/24 to those individuals whose income falls below £150,000 for 2022/23 and do not meet any of the other criteria, such as:

  • being in receipt of foreign income;
  • liability to the high income child benefit charge;
  • being in receipt of self-employment income over £1,000;
  • being in receipt of untaxed income (such as rental income, investments & dividends) of £2,500 or more.

Those affected should still consider their personal tax affairs closely, in particular in regard to the following:

  • ensuring that they register and file self assessment tax returns when they meet any of the other self assessment criteria. A link to HMRC’s online tool can be found here.
  • making sure that the appropriate higher rate tax relief is claimed on items such as allowable employment expenditure (e.g., business mileage, professional subscriptions), personal pension contributions and gift aid donations.
  • ensuring that the correct PAYE tax code is in operation, as unexpected tax liabilities can arise when incorrect tax codes are being used. This is particularly pertinent to individuals with income in excess of £100,000, as a result of the tapering of the personal allowance.
  • making sure that they structure their affairs so that they are as tax efficient as possible. The tapering of the personal allowance once your income exceeds £100,000 results in a marginal tax rate of 60%. With careful tax planning, taxpayers can reduce their net adjusted income to below this threshold and ensure that they retain the full personal allowance.

For those wishing to remain within the self assessment system, to ensure that their affairs are dealt with efficiently each year, unsolicited (voluntary) tax returns can still be filed.

If you have any queries regarding the above or would like to discuss your tax affairs generally, please do not hesitate to contact Tom Kirk at tom.kirk@wardwilliams.co.uk