Self assessment threshold changes for high earners paid via PAYE – 2023/4 and 2024/5

If your entire income is taxed under PAYE, you don’t have to complete a self-assessment form for the 2023/24 tax year if you earned less than £150,000. This filing threshold has been scrapped altogether from 2024/5 onwards.

The self-assessment reporting threshold was increased from £100,000 to £150,000 from 6th April 2023.

This means that if your adjusted net income was under £150,000 – and you have no other reasons to do so, you don’t have to fill in a personal tax return. The filing deadline for the 2023/4 tax year is 31st January 2025.

The threshold change was first mentioned in Issue 108 of Agent Update (HMRC).

And, following an announcement in the 2023 Autumn Statement, the reporting threshold will be abolished entirely from the 2024/25 tax year onwards (see below).

What is your adjusted net income?

This is your total taxable income before any personal allowances and tax reliefs have been accounted for.

Trading losses, charity donations via Gift Aid, and pension contributions paid gross may affect your adjusted net income.

Read the HMRC guide to help you calculate your adjusted net income here.

What do you have to do if the threshold change applies to you?

In theory, if you earned between £100,000 and £150,000 during the 2022/23 tax year, HMRC should have sent you an exit letter (SA251) explaining that you no longer need to file tax returns, assuming your income remains below the new threshold.

If you haven’t received a letter, it is possible that – for whatever reason – HMRC’s systems still expect you to file tax returns.

So, we recommend you mention this to your accountant. You or your accountant can contact HMRC online, by post or by telephone to update your self assessment filing indicator.

Removal of the threshold altogether for the 2024/5 tax year

In the 2023 Autumn Statement, point 5.61 states:

Reforming requirements to file a Self Assessment tax return – The government will no longer require individuals with income taxed only through Pay As You Earn to file a Self Assessment return from 2024-25.

This means that if you’re a high earner with no other sources of income, you will no longer need to file tax returns.

Reasons why you might still have to file a tax return

Of course, there are plenty of other reasons why you might still need to file a tax return, including:

• You have other sources of untaxed income, such as income from property lettings.
• You were self-employed (i.e. a sole trader or member of a partnership) during the tax year.
• You have capital gains to report – above the prevailing threshold.
• You receive income from overseas sources
• You have to pay the High Income Child Benefit Charge.

For further details, read this article – do all contractors need to file a tax return?