One of the criteria that mandates the completion of a Self-Assessment tax return is where earnings are more than £100,000 and these are taxed via Pay As You Earn (PAYE). This applied for tax year 2022/23, with returns submitted on or before 31 January 2024.
For tax year 2023/24, this income threshold increases from £100,000 to £150,000, taking more taxpayers out of the need to file a return. In a Stakeholder Digest on 01 May 2024, HMRC announced that taxpayers with earnings between £100,000 and £150,000 in 2022/23 should have received a letter from HMRC to confirm that they do not need to complete a tax return (for 2023/24, due by 31 January 2025). This is line with HMRC’s May 2023 Agent Update that advised they would be sending ‘Self-Assessment exit letters’.
This exit letter is the necessary proof required that HMRC do not have a Self-Assessment filing obligation for tax year 2023/24.
For Bookkeepers
There is still a requirement to complete a tax return if other criteria are met, for example:
- The taxpayer is in receipt of any untaxed income
- They are a partner in a business partnership
- There is a liability to the High Income Child Benefit Charge (HICBC)
- They are self-employed with gross income of over £1,000
Taxpayers are advised to use HMRC’s ‘Check if you need to send a Self-Assessment tax return’ tool.
Importantly, if no exit letter is received or HMRC write asking for a return, this means that their systems have a filing expectation – i.e. they will expect to receive one and will issue a penalty if it is not received. If the taxpayer believes they no longer have a filing obligation and you are acting as their agent, you must tell HMRC so that they can remove their filing expectation indicators. HMRC can be advised in 3 ways:
1. Online (using a Government Gateway account)
2. Online using HMRC’s Digital Assistant
3. By telephone or post
HMRC’s filing expectation is the most important consideration.
Note that Autumn Statement 2023 (point 5.61) announced that the requirement to submit a tax return for tax year 2024/25 (due by 31 January 2026) will be removed entirely when all income is taxed via PAYE. However, income via PAYE is NOT the only consideration.
