The self-assessment threshold has changed for people taxed through PAYE. Previously, the threshold was £100,000. However, the threshold has now increased to £150,000, and you must complete a self-assessment if you earn £150,000 or more taxed through PAYE.
Contracting through an umbrella company
If you are working via an umbrella company, providing they are compliant, the umbrella will ensure you pay the correct tax and National Insurance to HMRC. When you contract via an umbrella company, you are paid PAYE. PAYE stands for ‘Pay As You Earn’ and is HMRC’s way of collecting the correct tax each time you are paid. If your only income is paid to you through an umbrella company – you do not need to submit a self-assessment tax return unless you earn £150,000 or more.
When does the self-assessment threshold change come into effect?
The self-assessment threshold change comes into force in the 2023-24 tax year and will apply to subsequent years. You must file a self-assessment tax return if you earn £150,000 or more via PAYE. It is important to note that if you have additional income or meet the other criteria for self-assessment, you may still need to submit a personal tax return even if you do not earn more than the self-assessment threshold.
What happens if I earn less than the threshold?
If you filed a tax return for the 2022-23 tax year and earned between £100,000 and £150,000 via PAYE, HMRC will likely send you a self-assessment exit letter if you do not meet any of the other tax return criteria.
If your circumstances have changed or you do not receive a letter and believe you no longer need to send a tax return, you must notify HMRC. HMRC will review the information and send a letter confirming you do not need to file a return if they agree. You can notify HMRC by:
- Filling in an online form – you’ll need a Government Gateway account
- Using HMRC’s online digital assistant
- Phone or post
Please have your National Insurance and UTR numbers on hand, as you may be asked to provide this information.
What are the other criteria for self-assessment?
You are required to submit a self-assessment tax return if, in the last tax year (6th April to 5th April), any of the following applied:
- You were a partner in a business partnership
- You were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)
- You had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value
- You had a total taxable income of more than £150,000
- You had to pay the High Income Child Benefit Charge
You may also need to file a self-assessment tax return if you have any untaxed income, such as:
- Some COVID-19 grant or support payments
- Foreign income
- Income from savings, investments and dividends
- Money from renting out a property
- Tips and commission
If you need to complete a tax return and have not sent one before, you must register for self-assessment by the 5th of October. If you are unsure whether to submit a tax return, you can check online via the government’s website.
Do you need to submit a self-assessment tax return?
Our sister company, Churchill Knight & Associates Ltd, has a dedicated Personal Tax Department, which has completed over 25,000 personal tax returns since 1998. If you are required to pay tax via your self-assessment tax return, recuperate tax with a rebate, or have questions about submitting a tax return, Churchill Knight will ensure your tax return is submitted accurately and on time. To learn more about Churchill Knight’s tax return service, please call 01707 871622. Alternatively, you can complete the short form on our website.
Benefits of using Umbrella Company UK for your payroll
If you are looking for an umbrella company, there are many benefits of using Umbrella Company UK for your payroll:
- A SafeRec Certified umbrella company—SafeRec audits umbrella company payslips in real-time by cross-referencing payments with RTI sent to HMRC to ensure each payment is compliant and all deductions are legitimate. Every time a contractor is paid, they will be sent a payslip audit, which provides a thorough breakdown and allows them to check they have been paid compliantly.
- FCSA accredited – Each year, Umbrella Company UK must undergo a series of strict audits and assessments to ensure our processes adhere to the FCSA’s code of compliance (available here).
- Quick set-up – this can be done in minutes!
- Minimal ongoing administration.
- Access to a dedicated Onboarding and Umbrella Account team that will provide unlimited support via phone and email.
- Full insurance cover – £10 million Employers’ Liability Insurance, £10 million Public Liability Insurance and £5 Professional Indemnity Insurance.
- Access to My Digital: Our online portal and app allow you to easily submit your work hours and view payslips.
- No tie-in period, joining or leaving fees.
- Employee benefits, including Sick Pay and Maternity/Paternity Pay.
Do you have any questions about the service, or would you like to request a take-home pay illustration? Call 01707 669023 for a free consultation or request a callback at a time that suits you.
