Changes For 2023/24:
1. Personal Allowance Abatement Threshold: Historically, individuals were required to file a tax return if their income exceeded the point where the personal allowance started to be tapered away (£100,000). For the tax year 2023/24, it was announced that the income threshold would increase to £150,000. This means that individuals with earnings between £100,000 and £150,000 may be able to request the withdrawal of their tax return if being a company director is the only reason for being in self-assessment.
2. Company Directorship Not a Sole Reason: Being a company director is no longer considered a valid standalone reason to issue a tax return. Therefore, individuals who are company directors will not automatically receive a tax return, and other criteria need to be met.
Changes for 2024/25:
1. Complete Removal of Income Threshold: The Autumn Statement for 2023 announced that for the tax year 2024/25, the income threshold for self-assessment will be removed altogether. This means that individuals will no longer be required to file a tax return based solely on income levels, even if they are a company director.
2. High-Income Child Benefit Charge (HICBC) Adjustment: The government is planning to allow those liable to the High Income Child Benefit Charge (HICBC) to pay it through a PAYE coding adjustment. However, there is no current timetable specified for the implementation of this change.
In summary, these changes aim to simplify the self-assessment process and reduce the number of individuals required to file tax returns, particularly those with relatively straightforward tax affairs. The removal of the income threshold in 2024/25 is a significant shift in the criteria for self-assessment.
For many taxpayers, however, filing a self-assessment tax return is still likely to be the easiest way to get their tax affairs up to date. Taxpayers with incomes above £100,000 quite often have other sources of income, claims for further tax reliefs or share options as well as capital gains.
Please get in touch with us at 01902 711370 or email enquiries@uklandlordtax.co.uk to talk through your current situation and whether you should carry on filing a tax return or can safely stop.