As the 2023/24 SA return season is over, a new one is set to begin so ICB wants to remind members that for taxpayers taxed through PAYE only:
- The threshold increased to £150,000 for tax year 2023/24 (returns filed on or before 31 January 2025);
- The threshold is removed for tax year 2024/25 onwards
Although, there is still a requirement to submit a return where other criteria apply and you should use HMRC’s tool ‘Check if you need to send a Self-Assessment tax return’.
The threshold reduction is in accordance with HMRC’s efforts to simplify the tax system and reduce the administrative burden for taxpayers. However, HMRC’s systems will still have an expectation to receive a tax return unless:
- The taxpayer or agent advises there is no longer an obligation to complete a tax return; or
- HMRC advise via an ‘exit letter’ there is no longer a filing obligation
On 11 March 2025, the Exchequer Secretary to the Treasury (XST), James Murray, announced an increase in the Income Tax Self-Assessment (ITSA) reporting threshold from £1,000 to £3,000. This applies to earnings from side jobs like online trading, dog-walking, gardening, taxi driving, or content creation.
The requirement not to complete a tax return will be introduced before the UK Parliamentary term ends (in 2029). Mr Murray mentioned this would benefit around 300,000 taxpayers, but there has been no announcement about increasing the Trading Allowance from £1,000 to £3,000.
For Bookkeepers
Regarding the abolition of the £150,000 threshold, please verify your client has received their exit letter and retain this as proof. However, bear in mind that earning levels are not the sole determinant for the requirement to complete a tax return.
With regard taking more people out of the need to complete a Self-Assessment tax return, there is no immediate action required but it is important to look for two things as a result of the announcement:
1. The legislative path to the reporting relaxation; and
2. The introduction of the new online service
