Three tax changes you might not know about

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Date: 5 December 2023

A self employed woman may no longer need to complete a self assessment tax return

Accountants are warning that piecemeal changes to 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, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

There have been three separate 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 (absent meeting other criteria) 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. Further details were promised but are not yet available.

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.

"Whilst all simplification to the Self Assessment criteria benefits the tax payer and should be embraced, especially around future changes to the high-income child benefit charge, the lack of further detail and dates may cause confusion in the meantime." Mike Parkes, GoSimpleTax.

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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).

Simplification of self assessment

Caroline Miskin, senior technical manager digital taxation at ICAEW, said: "This piecemeal approach to changing the self assessment criteria may cause confusion. HMRC has confirmed to ICAEW that the other criteria are unchanged but remain under review."

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.

"Ideally, the review of the self assessment criteria would have resulted in one set of amendments," Miskin said. "However, HMRC needs to take account of changes that it is planning elsewhere as well as the operational and compliance implications. The single customer account programme should bring changes that will improve how income tax payers outside self assessment finalise their income tax liability. This will be vital if more tax payers are removed from self assessment."

Written by Rachel Miller.

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