The threshold above which PAYE taxpayers are required to submit a tax return has increased from £100,000 to £150,000. This means that people with employment income within this bracket, who are not subject to self assessment for another reason, will no longer need to submit a tax return just because of the level of their PAYE income, the Institute said.

Taxpayers who are no longer required to submit a return – whether due to the new PAYE income threshold, cessation of self-employment or stopping renting out property before the 2023/24 tax year, or because they are no longer liable for the high income child benefit tax charge – should get their return formally withdrawn, either online or by contacting HMRC. They should do this as soon as possible because HMRC will need to agree, by 31 January, that a return is no longer required to avoid a late filing penalty being automatically issued, ICAEW said.

Self-employed people and members of partnerships who prepare accounts to a date other than 31 March to 5 April should be aware of basis period reform and should seek advice from an accountant or HMRC about how this affects them. This reform aligns when profits are taxed with the tax year and the transitional 2023/24 tax return will be more complex for those with accounting periods that are not aligned with the tax year. 

Those who cannot afford to pay their tax bill should still file their return by the deadline to avoid late filing penalties and should then set up a time to pay arrangement with HMRC, which can often be done online, the Institute said.

ICAEW also recommends that taxpayers use HMRC’s app to access information they need to complete their tax return, including self assessment tax reference numbers and details of their employment income.

Caroline Miskin, ICAEW Senior Technical Manager, Digital Taxation, said:

“There have been some notable changes to self assessment this year. Basis period reform – the alignment of when trading profits are taxed with the tax year¬ will create headaches for anyone not already using an accounting period aligned with the tax year. If you’re unsure about how this reform affects you, seek advice from HMRC or an accountant. Don’t delay however, as the 31 January deadline is approaching rapidly.

“More people than usual are likely to be taken out of self assessment for 2023/24 – particularly those earning between £100,000 and £150,000 due to the higher threshold. If you no longer need to file a return, be sure to get it formally withdrawn rather than just not filing it. You may also need to ask HMRC to reactivate your self assessment account if it has been closed incorrectly.

“Finally, the HMRC app is well worth downloading. It’s much quicker than searching through paperwork or waiting on hold to HMRC, and it offers lots of other useful features, including being able to pay your tax directly from your bank account using open banking.”

ENDS

Notes to editors:

1. On 6 January, HMRC announced that 5.4m people were yet to file their tax return.