HMRC announces an increase in the Self Assessment Threshold

In an update from HMRC, they have announced a change in the threshold for PAYE taxpayers to submit a self assessment. From the financial year 23-24, the Self Assessment threshold will rise from £100,000 to £150,000.

So what does this really mean? If you were earning above £100,000 pa via PAYE (i.e. paid in payslips through a standard employer) during 22-23 you will be required to submit a self assessment tax return (SATR) for that year. From 23-24 onwards, you will no longer be required to submit this unless you are now earning over £150,000 per year via PAYE.

Anyone earning under £150,000 pa will no longer be required to submit a self assessment tax return as long as PAYE is their only source of income. So from the financial year 23-24 onwards, you’ll save yourself a nice chunk of admin time!

What industries does this usually apply to?

We took a look at the highest paid positions available in the UK who would usually earn above £150,000 per annum in PAYE and therefore would be subject to the new Self Assessment Threshold.

• Chief Executives
• Corporate Law
• Top level consultants
• High level tech positions (developers, chief technical officers)
• Private Surgeons / Healthcare professionals
• Financial Sectors (i.e. banking)
• High performance sales positions

So will this change the amount of tax you need to pay?

HMRC in a statement to Accounting Web stated that:

“This change will reduce the administrative burden for customers, reduce costs and make the self assessment process more efficient.

“It does not reduce or change the tax liability of those affected. Income tax will continue to be collected through the PAYE system.”

If you no longer need to submit i.e. if your 2022/23 tax return shows income between £100,000 and £150,000 that is taxed through PAYE, and you have no other substantive sources of income, you will receive a SA251 exit letter.

How do I check if I should submit a Self Assessment for my PAYE income?

HMRC have a useful checker tool to help you if you’re unsure whether you should be submitting a self assessment for the tax year 22-23 here:

Check if you need to send a Self Assessment tax return – GOV.UK (www.gov.uk)

I need to submit, how and when do I do this?

For 22-23, the tax year is now over so you can submit anytime from now, until January 31st 2024. It’s a great idea to get this over and done with early on, rather than waiting until January and panicking! You can do so yourself online if you feel confident with the process here: File your Self Assessment tax return online – GOV.UK (www.gov.uk).

If you’re unsure on how to do the return or would like a professional to rely on, take a look at our tax zoom services here.  If you have any additional income such as a property let that you want to track on a more regular basis, then a Mazuma subscription is for you!

What about people who are Self-Employed?

This specific change only applies to those people earning only PAYE income, so does not apply to the self-employed. The threshold will stay the same at £1000 per financial year as normal.

What should I do if I have both PAYE and additional untaxed income?

If you don’t already have one, it’s definitely advisable to speak to an accountant if your additional income will be more than £1000 in a financial year (April to April). Take a look at the subscription options below, if you need a dedicated accountant and proactive advice about your tax contributions.