Tax return shake-up for earners from £100,000 to £150,000

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HM Revenue & Customs (HMRC) will soon write to earners bringing in between £100,000 and £150,000 in net adjusted income regarding a significant change in tax return requirements.

Those in this band do not automatically need to send a Self-Assessment tax return for the 2023/24 financial year if they meet the following criteria:

They are taxed through Pay-As-You-Earn (PAYE)
They submitted a 2022/23 tax return showing income within the stated band
They have no other income
They do not meet any other criteria for requiring Self-Assessment, such as being self-employed and earning over £1,000 from self-employment
They do not pay the High Income Child Benefit Charge (HICBC)
They are not a partner in a registered business partnership
They do not receive any untaxed income over £2,500.

Net adjusted income refers to total taxable income before your Personal Allowance is applied, but after certain reliefs, such as charitable donations via Gift Aid.

Anyone earning between £100,000 and £150,000 annually who does not meet all these criteria will need to submit a Self-Assessment return for the previous financial year as normal.

If you need to send a return for the 2023/24 financial year, you must register by 5 October 2024 and submit it by 31 January 2025.

Are further changes coming?

2023/24 was a transition year towards completely removing the requirement for PAYE-only taxpayers to submit a Self-Assessment return.

In the most recent financial year, those earning over £150,000 per annum were still required to submit a return, despite paying tax through PAYE only.

For the 2024/25 financial year onward, this requirement has been removed entirely.

Those that need to submit a Self-Assessment return for 2023/24 should remember that the Personal Allowance decreases by £1 for every £2 that you earn over £100,000 – effectively removing the Personal Allowance for incomes of £125,140 or more.

For advice on Self-Assessment and optimising your personal taxes, please contact our team.