Accountants are warning that the tax changes and the way self assessment works could cause confusion for UK tax payers.
There have been some changes to the rules governing self assessment this year and more are expected as new digital services are rolled out.
There have been three separate tax change announcements from HMRC in 2023 on changes to the self assessment criteria. In May 2023, HMRC announced that the income threshold for filing a self assessment tax return would increase from £100,000 to £150,000. This change takes effect from the 2023/24 tax year.
In a written ministerial statement in July, the government announced plans to simplify the process for tax payers becoming liable to the high income child benefit charge. The plan is that employed tax payers will be able to pay the charge through their tax code, without the need to register for self assessment.
The Autumn Statement 2023 included an announcement that the income threshold of £150,000 would be removed altogether. This change takes effect from the 2024/25 tax year.
The following criteria requiring an individual to register for self assessment remain unchanged:
- Self-employment income over £1,000;
- Other untaxed income of £2,500 or more;
- Claims for tax relief for employment expenses of more than £2,500;
- Income from savings or investments over £10,000 (below this level HMRC will initially seek to collect the tax through a PAYE coding adjustment).
Further details on the self assessment criteria can be found in HMRC’s self assessment manual. Tax payers can also use HMRC’s online tool to check whether they need to submit a tax return.