Self Assessment Threshold Change + Personal Allowance

[FredAstaire]

The threshold for self assessment has moved up to 150k.

So what happens if you earn over 100k and thus would lose some of your personal allowance in the 60 tax trap?

This isn't mentioned at all in any of the hmrc 'check if you need to do a self assesment' questions. I cant imagine its an accidental omission, so what's going on?

[Jockman]

I was under the impression that Anyone can do SA if they so choose?

[Zigster]

I’m guessing it’s assumed to be captured by your P2 tax code. So your tax code on your pay slips from your employer each month.

If you’ve more complex finances (eg, income from various other sources not just employment) then you should be doing a tax return each year anyway.

[Sheepshanks]

HMRC will correct it after year end, by sending you a bill and new tax code.

[YouWhat]

Jockman said:

I was under the impression that Anyone can do SA if they so choose?

Yes, it’s not HMRC’s job to tell you to do SA it’s the individuals responsibility to know they have to submit one.

[Sheepshanks]

Jockman said:

I was under the impression that Anyone can do SA if they so choose?

I'm not aware there's any mechanism for rejecting a self assessment that you've done, but they'll write and tell you not to do them in future.

Why would you do one if you didn't need to?

[Roger Irrelevant]

I assume it's not mentioned in HMRC's Q&A because the fact you may lose some 'extra' post-tax income due to the loss of personal allowance is irrelevant to the question of what your pre-tax income is for self assessment purposes.

[FredAstaire]

YouWhat said:

Yes, it’s not HMRC’s job to tell you to do SA it’s the individuals responsibility to know they have to submit one.

exactly, but if you follow the tool "do i have to fill in a self assessment" earning over 100,00 isnt one of the questions.

Ignorance is no defence, but if you ARE ignorant of the 100k annual-allowance taper and find yourself answering the questionaire you willl still come away thinking that you do not have to so a self assessment.

[Sheepshanks]

FredAstaire said:

exactly, but if you follow the tool "do i have to fill in a self assessment" earning over 100,00 isnt one of the questions.

Ignorance is no defence, but if you ARE ignorant of the 100k annual-allowance taper and find yourself answering the questionaire you willl still come away thinking that you do not have to so a self assessment.

You don't - "the system" will take care of it. Probably.

[jobiden]

I agree!!!

[Countdown]

FredAstaire said:

The threshold for self assessment has moved up to 150k.

So what happens if you earn over 100k and thus would lose some of your personal allowance in the 60 tax trap?

This isn't mentioned at all in any of the hmrc 'check if you need to do a self assesment' questions. I cant imagine its an accidental omission, so what's going on?

Why do you need to do a SA just because you earn over £100k?

[Panamax]

The way HMRC present their "tax calculation" when you do SA online doesn't help at all.

When they get to the actual tax calculation on taxable income they don't show your personal allowance (or in an appropriate case your remaining personal allowance) as a band with 0% tax. All they show is bands that ARE taxed - at 20%, 40% or whatever. So you may need to look back up through the information to see exactly how much personal allowance you have been allowed.

If you have done any "gift aid" charitable giving it will further complicate things if you are trying to hit a taxable income of exactly £100,000 because it's the grossed-up amount that counts,
40% taxpayer
Give charity £100
Charity claims a further £25 from the government so they receive £125 in total
HMRC then say £125 was your gross donation on which you get 40% tax relief, i.e. a total of £50 tax relief
BUT the charity has already received £25 of it in cash so you'll only get the other £25 given to you as tax relief.

So what does this matter? Well, if you have an income just over £100k and are inclined to make charitable gifts you can get 60% tax relief on the gifts while you yourself only ever pay 40% tax. You need to remember to have the grossed-up amount in mind when doing your projections.

[Sheepshanks]

Panamax said:

The way HMRC present their "tax calculation" when you do SA online doesn't help at all.

When they get to the actual tax calculation on taxable income they don't show your personal allowance (or in an appropriate case your remaining personal allowance) as a band with 0% tax. All they show is bands that ARE taxed - at 20%, 40% or whatever. So you may need to look back up through the information to see exactly how much personal allowance you have been allowed.

Your personal allowance shows in the calculation as a deduction from your total income received.

I agree it's confusing the way that "moves" the bands though - so, for example. 40% tax is at something like £38K instead of £50K.

[Panamax]

Sheepshanks said:

Your personal allowance shows in the calculation as a deduction from your total income received.

Yes, although not how it was calculated. i.e. the £1 of allowance lost for every £2 of income over £100k
And similarly they use a grossed-up charitable gift figure without mentioning the actual net amount sent to the charity.

[FredAstaire]

Countdown said:

Why do you need to do a SA just because you earn over £100k?

well, I thought it was because thats how they claw back the personal allowance but now im not so sure.

[Countdown]

FredAstaire said:

Countdown said:

Why do you need to do a SA just because you earn over £100k?

well, I thought it was because thats how they claw back the personal allowance but now im not so sure.

AIUI they change your tax code for the following year.

[Sheepshanks]

Countdown said:

AIUI they change your tax code for the following year.

They used to seem to change them every 5 mins during the year, but, at least for me (and wife), they seem to stop doing that in the last couple of years - then we retired.

[DJC76]

Sheepshanks said:

I'm not aware there's any mechanism for rejecting a self assessment that you've done, but they'll write and tell you not to do them in future.

Why would you do one if you didn't need to?

If you are a higher or additional rate taxpayer and give any money to charity not via GAYE or have any qualifying professional subscriptions it’s worth doing one anyway.

[Sheepshanks]

DJC76 said:

If you are a higher or additional rate taxpayer and give any money to charity not via GAYE or have any qualifying professional subscriptions it’s worth doing one anyway.

I presume you can submit that info separately on some form or other?

I suppose if your affairs are straighforward then it's easy enough to do SA anyway - although it annoyed me, as I had three employers, that some years the all the employer info, pay, tax etc, would be already filled in, and then other years it wouldn't. I did our 23/24 returns over Christmas - wife's was ready filled and mine wasn't.

[Zigster]

DJC76 said:

Sheepshanks said:

I'm not aware there's any mechanism for rejecting a self assessment that you've done, but they'll write and tell you not to do them in future.

Why would you do one if you didn't need to?

If you are a higher or additional rate taxpayer and give any money to charity not via GAYE or have any qualifying professional subscriptions it’s worth doing one anyway.

All captured in my tax code for the year (including an estimate of charity payments made during the year, under/over tax payments from previous years, etc).