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HMRC’s Rule Changes for Over £100k Earners

Published by Prerana
Published Date: May 6, 2024

HMRC has raised the threshold for tax returns for individuals earning between £100,000 and £150,000 annually. This will relieve many in this income bracket of automatic Self Assessment Tax Return submission obligations starting from the 2023/24 tax year. These changes aim to simplify tax obligations and streamline the process for high earners.

What Are the Rule Changes?

Taxpayers in this income bracket were previously required to file for the Self Assessment Tax Return, even if their income came through the PAYE (Pay As You Earn) system and they had no additional sources of income. However, HMRC has raised the threshold from the Tax Year 2023/24. This means people in this income range who only receive income through PAYE and have no other  sources of income will no longer need to file a Self Assessment Tax Return automatically.

High income earners might not have to pay tax return

HMRC proactively sent letters to all taxpayers who were affected by this change, confirming that they no longer needed to file the Self Assessment Tax Return automatically under certain conditions.

What Are the Conditions for Self Assessment Tax Return?

There are certain conditions that would still make a taxpayer earning between £100,000 to £150,000 liable for a Self Assessment Tax Return. Those criteria include:

  • Receiving untaxed income over £2,500
  • Being a partner in a business partnership
  • Paying the High Income Child Benefit Charge (HICBC)
  • Being self-employed with a gross business income over £1,000

The income threshold of completing a tax return for PAYE only taxpayers will be completely removed from the Tax Year 2024/25. However, taxpayers will still need to submit a tax return if they meet any other criteria listed above.

Conclusion

HMRC has raised the threshold for automatic Self Assessment Tax Return submission from the 2023/24 tax year for those earning between £100,000 and £150,000 annually. This change helps to simplify tax obligations for high earners. Taxpayers should remain vigilant as certain conditions still require a Self Assessment Tax Return. The removal of the income threshold for PAYE-only taxpayers in the 2024/25 tax year underscores ongoing efforts to optimise the tax framework for all stakeholders. Also, HMRC advises people to use its online tools to check whether they need to file a tax return.

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