The UK government has introduced a significant change to the self-assessment tax filing process for high earners. Individuals earning over £150,000 per year through the Pay As You Earn (PAYE) system are now required to file a self-assessment tax return, marking a shift from the previous threshold of £100,000. This update simplifies tax obligations for many and could reduce the administrative burden. At SA Lee Accountancy Ltd, we’ll explain what this means for you and how to ensure you’re fully compliant.
Why Has the Threshold Changed?
The new threshold of £150,000 reflects the government’s aim to simplify tax filing for those whose tax is primarily handled through PAYE. Previously, earners over £100,000 were required to file a self-assessment, even when there was little complexity in their tax situation. This increase is expected to reduce the number of unnecessary self-assessment filings, giving taxpayers more time and reducing paperwork for both individuals and HMRC.
Impact on High Earners
For those earning between £100,000 and £150,000, this change means they no longer automatically need to file a self-assessment, provided their income is solely through PAYE. This can help streamline their tax process. However, if you have additional income sources such as rental income or dividends, you may still need to file a self-assessment. It’s always best to verify your tax obligations, even if your income falls within the PAYE system.
For individuals earning over £150,000, self-assessment remains essential. It’s important to file returns on time to avoid penalties and to ensure all income is correctly reported. You may also want to explore ways to optimise your tax situation, such as through pensions, charitable donations, or other available reliefs.
Key Considerations for Planning
Although the increased threshold reduces the filing requirements for many, this is no time to overlook your tax planning. Effective tax management remains important, particularly for those nearing the £150,000 threshold. By staying informed about deductions and allowances, such as pension contributions and investment reliefs, you can ensure that you’re maximising your financial efficiency.
At SA Lee Accountancy Ltd, we advise all high earners to review their tax situation regularly to ensure compliance and avoid any unnecessary penalties. We can help you understand your full tax obligations and offer guidance on managing your self-assessment process effectively.
Conclusion
The increase in the self-assessment threshold from £100,000 to £150,000 is a positive development for many high earners, reducing their tax filing burden. However, if you’re earning over £150,000, it’s crucial to stay proactive with your tax planning and compliance. If you’re uncertain about your filing requirements or want to explore tax-saving opportunities, contact SA Lee Accountancy Ltd for expert advice, we look forward to hearing from you.
