Self assessment criteria are changing

HMRC’s plan to review the self assessment criteria was consulted on in Simplifying and modernising HMRC’s Income Tax services through the tax administration framework that ran from March to June 2023. ICAEW responded in ICAEW REP 53/2023.  

There have been three separate announcements in 2023 on changes to the criteria: 

• In May 2023, in Agent Update 108, 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 taxpayers becoming liable to the high income child benefit charge. The plan is that employed taxpayers 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.
• 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. 

Caroline Miskin, Senior Technical Manager Digital Taxation at ICAEW says: “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.”  

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).  

Further details on the self assessment criteria can be found in HMRC’s self assessment manual. Taxpayers 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 says. “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 taxpayers outside self assessment finalise their income tax liability. This will be vital if more taxpayers are removed from self assessment.”     

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