Criteria for self-assessment are changing
Historically, you may have had to file a tax return if your income exceeded the point where the personal allowance starts to be tapered away. This has changed for 2023/24. However, the Autumn Statement also made a further change that will apply from 2024/25. What’s the full story?
If your tax affairs are relatively straightforward, it can be very frustrating to have to complete a tax return every year. In the past, HMRC has insisted on issuing returns for the following reasons, irrespective of other circumstances:
- Income exceeds £100,000 (the personal allowance abatement threshold);
- There is a liability to the high income child benefit charge (HICBC);
- The individual is a company director.
HMRC now accepts that being a company director is not a valid reason to issue a tax return in and of itself. For 2023/24, it was announced that the income threshold would increase to £150,000, meaning you may be able to request your return for this year be withdrawn if the only reason you have been in self-assessment was that your earnings were more than £100,000. However, the other criteria for self-assessment remain unchanged, so if you have earnings of, say, £120,000 but also have untaxed income of £5,000, you will still need to complete a return.
The 2023 Autumn Statement announced that for 2024/25 the income threshold will be removed altogether. The government is also intending to allow those liable to the HICBC to pay it via a PAYE coding adjustment, though there is no current timetable for this.
Related Topics
-
Should you use simplified expenses?
The flat rate expense you can claim for business journeys if you’re self-employed has increased to 55p per mile. Can you use simplified expenses for motoring costs and is it more tax efficient to do so?
-
HMRC targets smaller tax debts
HMRC is stepping up collection of lower‑value tax debts, signalling a firmer approach to long‑overdue liabilities while encouraging earlier engagement. Direct recovery from bank and building society accounts has been re‑introduced on a trial basis, alongside a government consultation on HMRC powers and tax administration. What are the key points to be aware of?
-
New digital process for NI refunds
HMRC has introduced an online service to claim a refund of Class 1 NI contributions but not everyone can use it. What can you do if you've paid too much NI?