Taxpayers whose only income is taxed under PAYE, and who earn between £100,000 and £150,000, will be removed from self-assessment from tax year 2023/24 onwards.
In May’s Agent Update, HMRC reported that the self-assessment threshold for taxpayers taxed through PAYE will be changing with a rise from the previous £100,000 to £150,000 from tax year 2023/24.
The self-assessment threshold for PAYE taxpayers for 2022 to 2023 remained unchanged at £100,000. However, HMRC has said that once taxpayers submit their 2022 to 2023 tax return, they will be assessed against the new £150,000 criteria and if their 2022/23 tax return shows income between £100,000 and £150,000 that is taxed through PAYE, and they have no other substantive sources of income, they will receive a SA251 exit letter.
If you are working via an umbrella company, please remember your assignment rate is not your PAYE earnings or taxable salary needed for the assessment, this is the figure after employment costs; Employers National Insurance, Apprenticeship Levy and the umbrella margin.
If you are unsure of your PAYE earnings this should be listed on your payslip with year-to-date figures. Otherwise, as you cross the end of the tax year (April 5th), a P60 should be issued with all the details you need to keep an eye out for.
However, taxpayers will still need to submit a tax return for 2023/24 if they’re in receipt of any untaxed income, are a partner in a business partnership, need to pay the High-Income Child Benefit Charge (HICBC) or if they’re self-employed with a gross income over £1,000.
HMRC stated that “It does not reduce or change the tax liability of those affected. Income tax will continue to be collected through the PAYE system.” The tax department also added that any taxpayers will still need to file a return if they have other untaxed income that cannot be coded out and taxed via PAYE.