If you’re a UK taxpayer, you may need to file a self assessment tax return with HM Revenue and Customs (HMRC) every year. This is because the self assessment system is used to collect tax from individuals who have income that isn’t taxed at source.
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However, not everyone needs to file a self assessment tax return, as the threshold for doing so depends on a number of factors.
In this blog post, we will explore how much you can earn before needing to file a self assessment tax return, as well as the different circumstances in which you may be required to file a tax return.
What is the self assessment tax threshold?
The self assessment tax threshold is the amount of income that an individual can earn before they are required to file a self assessment tax return. The threshold varies depending on a number of factors, including the type of income received and the individual’s personal circumstances.
For the tax year 2022/23, the self assessment tax threshold is £100,000. This means that if an individual’s income is below this threshold, they will not be required to file a self assessment tax return. However, there are a number of circumstances in which an individual may still need to file a tax return, even if their income is below the threshold.
When do you need to file a self assessment tax return?
There are a number of circumstances in which you may be required to file a self assessment tax return, even if your income is below the self assessment tax threshold. These include:
You are self-employed
If you are self-employed and earn more than £1,000 during the tax year, you will need to file a self assessment tax return. This is because self-employed individuals are responsible for calculating their own tax liability and paying any tax owed to HMRC.
You are a company director
If you are a company director and receive income that is not taxed at source, such as dividends, you will need to file a self assessment tax return. This is because company directors are considered to be self-employed and are responsible for paying their own tax.
You have income from savings, investments or property
If you have income from savings, investments or property that is not taxed at source, such as rental income, you will need to file a self assessment tax return. This is because this type of income is not subject to PAYE, so it is the responsibility of the individual to calculate their own tax liability.
You have additional sources of income
If you have additional sources of income, such as income from a second job or freelance work, you may need to file a self assessment tax return. This is because the PAYE system may not take into account all of your income, so you will need to ensure that you have paid the correct amount of tax.
You have received income from abroad
If you have received income from abroad, such as a rental property or a salary from an overseas employer, you will need to file a self assessment tax return. This is because this type of income is not subject to UK tax at source, so it is the responsibility of the individual to declare it to HMRC.
You have overpaid or underpaid tax
If you have overpaid or underpaid tax during the year, you may need to file a self assessment tax return to correct your tax liability. This can happen if your tax code is incorrect, or if you have received income that is not subject to PAYE.
Conclusion
The self assessment tax threshold is the amount of income that an individual can earn before they are required to file a self assessment tax return. For the tax year 2022/23, the threshold is £100,000. However, there are a number of circumstances in which an individual may still need to file a return.
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