How do you know if you need to submit a self-assessment tax return?
As we have recently commenced a new tax year, you might be turning your attention to your tax liability for 2023/24. If you need to file a self-assessment tax return for this period, the deadline for doing so is 31 January 2025.
One of the key questions you should answer sooner rather than later is: how do I know if I need to file a return?
As tax rules change and your own circumstances evolve, your tax position may be quite different for this year than it was last year. If you neglect to file a tax return when you need to, or are late in doing so, you could face a hefty fine.
Read on to learn more about how to know if you need to file a return or if you need to declare any earnings or changes in your circumstances to HMRC.
You may need to complete a self-assessment tax return if you meet certain criteria
There are several reasons why you may need to complete a self-assessment tax return. For example, you might have untaxed income to declare from:
Rental income
Tips or commission
Self-employed income
Savings or investments (if the income exceeds £10,000)
Earnings from abroad, or from the UK if you live abroad
Pensions (if the income exceeds your Personal Allowance)
Selling taxable items such as a second home, stocks and shares that aren’t held in a tax-efficient wrapper, personal possessions worth £6,000 or more (excluding your car), and business assets.
Some other reasons that you may need to complete a self-assessment include:
You’re a director of a company that isn’t a non-profit organisation, such as a charity.
Your or your partner’s income was over £50,000 and you’re claiming Child Benefit.
Your taxable income was over £100,000.
You’re a higher- or additional-rate taxpayer and need to claim tax relief on pension contributions.
You’re a trustee of a trust or registered pension scheme.
You received a P800 from HMRC saying you didn’t pay enough tax last year.
You can check to see if you need to fill in a self-assessment tax return on the government website if you’re unsure.
There have been some changes to the criteria for needing to submit a tax return in recent years
Tax rules can be complex, and it’s important to ensure you stay up to date with any changes to the rules that might affect you.
Previously, you were required to complete a self-assessment return if you earn £100,000 or above, but for the 2023/24 tax year, this threshold has been raised to £150,000. This requirement has been lifted entirely from the 2024/25 tax year.
So, if you earned less than £150,000 through PAYE in 2023/24, and you don’t meet any of the other criteria listed above, you don’t need to complete a self-assessment for that tax year.
If you have previously completed a tax return, though, you need to inform HMRC of the reason why you no longer need to complete one. You’ll then receive a letter confirming this.
You may need to inform HMRC of your circumstances, even if you don’t need to complete a tax return
There may be some instances when you don’t necessarily need to complete a self-assessment tax return, but you do need to inform HMRC of certain circumstances that could affect your tax position.
One of these is if you have exceeded your Personal Savings Allowance (PSA). The PSA is the limit on savings interest that you can earn before it becomes liable for Income Tax.
In 2023/24, the PSA was:
£1,000 for basic-rate taxpayers
£500 for higher-rate taxpayers
£0 for additional-rate taxpayers.
If the amount of interest that you earnt on your cash savings exceeded these thresholds, you may need to pay Income Tax on the excess at your marginal rate.
In the past, when interest rates were much lower, it was difficult to earn enough interest for the PSA to affect you. However, since interest rates have risen over the past two years, it’s now much easier to exceed the PSA.
The table below shows how much you would need to hold in a cash savings account offering the highest interest rate to earn enough interest to exceed the PSA.
Source: MoneySavingExpert. Rates correct as of 21 May 2024. Assumes constant balance.
If your savings interest exceeds the PSA and you have PAYE earnings or take income from your pension, HMRC will usually amend your tax code so that the tax is collected from your pre-tax salary. Otherwise, the tax that is owed will be added to your self-assessment bill.
Get in touch
Careful tax planning can help you to minimise your bill and put more of your wealth towards achieving your long-term goals. If you’d like support with this, please get in touch with us today. Our friendly team of advisers is based in Towcester and we’ll be happy to help.
Email theteam@fortitudefp.co.uk or call us on 01327 354321.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.