Wondering whether you need to do a self-assessment tax return because you earn more than £100,000? In this guide, you’ll find out who needs to fill in a tax return because their income exceeds £100k+.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
Do You Need to Do a Self Assessment Tax Return If You Earn Over £100K?
HMRC requires anyone who earns over £100k during one tax year to fill in a self-assessment tax return (SA100). One of the reasons the requirement is in place is so that HMRC can check how people are making an income and that they are repaying their personal allowance, known as the personal allowance restriction.
Personal Allowance Restriction 2022-23
The personal allowance restriction affects UK individuals who earn over £100k during one tax year. It means that the personal allowance a UK individual is entitled to is restricted by £1 for every £2 of taxable income over £100,000. So, once income reaches £125,140 all personal allowance is lost.
Will HMRC Know You’re Earning Over £100k?
If you are employed by someone, then you’ll receive a payslip with income tax and National Insurance deducted on your behalf under the rules of PAYE. Your employer will know how much to deduct because they have your tax code. Every time they pay you, they report your earnings to HMRC. That means HMRC will know if you are earning over £100k through your employment. Also, they will most likely get in touch with you (by letter) to notify you that you need to fill in a tax return.
If you are not employed by someone, then you’ll need to fill in a tax return if you have taxable income that you need to declare and pay tax on. Most forms of income are taxable in the UK and if you are not employed by someone, it is your responsibility to let HMRC know you have untaxed income to declare by registering for self-assessment.
Tax Tips for Individuals with Income Over £100k+
Income tax allowances and reliefs help to reduce the amount of income tax you need to pay. For example, contributing up to £40,000 during the tax year into your private pension plan can reduce your taxable income. Thereby, bringing your income below the personal allowance restriction. You may still need to fill in a tax return to claim these allowances and reliefs, so self-assessment may be unavoidable once your income reaches a certain level.
If you are paying any costs as part of your work but not getting a refund from your employer you may be able to claim tax relief on employment expenses. Common expenses are work mileage, professional fees and subscriptions as well as working from home. Eligible expenses can be claimed through your tax return in the employment section.