There is a long list of reasons why it is necessary to complete a self-assessment tax return, but PAYE taxpayers are generally exempt from the requirement. Previously, exemption was subject to a £100,000 income ceiling, but the threshold has been increased to £150,000 for the current tax year onwards.
The £150,000 threshold applies to total income – not just gross salary – and also any taxable benefits and income from savings and investments.
Other reasons to file a return
There are a number of other reasons why an employee with income below £150,000 will still be required to complete a tax return. For example, where the taxpayer also has:
- Income from property rental;
- More than £10,000 in either dividend income or savings income;
- Income from a trust;
- To pay capital gains tax (more likely now with the exempt amount reduced from £12,300 to £6,000);
- Income from self-employment or partnership income; or
- To pay the High Income Child Benefit Charge.
When a return is not required
Employed taxpayers with income between £100,000 and £150,000 for 2022/23 – and with no other reason for completing a return – should receive a self-assessment exit letter from HMRC confirming that they do not need to complete a return for 2023/24.
In other situations, it will be necessary for taxpayers to contact HMRC and inform them why a return is no longer necessary.
Taxpayers can ask for a return to be withdrawn even after HMRC has charged late filing penalties. Subject to HMRC agreement, the penalties will then be waived.
Even if a tax return is not strictly required, there are some situations where a taxpayer might want to complete a return anyway. The main reason will normally be to claim a relief, such as pension contributions or donations to charity.
If a tax return is not submitted, it will be more important than ever to check your tax code, which will typically be used to collect tax on taxable benefits and savings income.
To check if a self-assessment tax return is required, use HMRC’s online tool found here.