In the past, you usually had to file a tax return when your income went beyond a certain limit where the personal allowance begins to decrease. But for the tax year 2023/24, this requirement has been altered. Additionally, there’s another change mentioned in the Autumn Statement, which will take effect from the tax year 2024/25
Filling out a tax return each year can be annoying, especially if your finances are pretty simple. The tax office, HMRC, used to require people to do this for a few specific reasons, regardless of other factors:
Good news! HMRC has recognized that just being a company director doesn’t automatically require you to file a tax return. Starting from the tax year 2023/24, they raised the income threshold to £150,000. So, if your only reason for being in the self-assessment system was having earnings over £100,000, you might be able to skip filing a return for this year.
However, keep in mind that if your situation involves other factors, like having untaxed income of £5,000 alongside your £120,000 earnings, you’ll still need to go through the tax return process. The rules for other criteria in self-assessment haven’t changed, but the threshold increase is good news for those in the £100,000 to £150,000 income range.
In the 2023 Autumn Statement, there was a big change planned for the tax year 2024/25. The government decided to completely get rid of the income threshold, meaning there won’t be a specific earnings limit that triggers the need for a tax return.
Additionally, for those who have to deal with the High Income Child Benefit Charge (HICBC), there’s a plan in the works to let them pay it through a PAYE coding adjustment. However, as of now, there isn’t a fixed schedule for when this will be implemented. So, big changes are on the horizon, making things potentially simpler for many taxpayers.
This is general information, not tax advice. Consult a qualified accountant for advice tailored to your situation. Guru Accountancy can assist you in navigating your specific circumstances.