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Did the tax return threshold change for high-earners?

  • 4 min read
  • Last updated 26 Mar 2024

Yes, but you had to be Nancy Drew to have noticed. 

Unless you’re a keen fan of HMRC’s monthly agent update – cue tumbleweed – you may have missed their recent rule change that affects high-earners. So let us catch you up. 

At the end of May 2023, HMRC announced that they’d be raising the threshold at which people with a salary (PAYE) have to file a tax return. The rule was that you had to file if you earned £100,000+ per year. 

But it changed on 6th April 2023. From this point, you didn’t have to file unless you earned £150,000+.

From the 2024/25 tax year, high earners who are purely PAYE and have no other streams of income now don’t have to file a tax return at all.

A bit of background 🤓

When you start earning £100k+, you start to lose entitlement to something called the personal allowance. The personal allowance is the first chunk of your income that you earn tax-free.

In the 2024/25 tax year, the personal allowance is £12,570, but it’s subject to change depending on the chancellor at the time, the Autumn/Spring Statements, and the way of the wind.

When you earn £100k+, you lose £1 of your personal allowance for every £2 you earn over £100k. So, by the time you earn £125,140, you’re not entitled to any of the personal allowance.

Maths, folks.

Why do you file a tax return?

Great question. Get ready to sink your teeth into the answer. 

In true HMRC fashion, there’s an extra and expensive layer of confusion when it comes to taxing high-earners. 

As you may (or may not) know, you’re usually taxed on multiple tax rates at once. These multiple rates account for different portions of your income. Check out the image below to see a visual of what we mean by this. 

Income tax rates UK

When you earn £100k+ and start to lose your personal allowance, each tax-free £1 you lose becomes £1 of income that needs to be taxed. But – horror – it’s taxed at both 20% (the basic rate) and 40% (the higher rate). This gives it a whopping 60% total 🤯

You therefore may need to file a tax return to make sure that this is being done correctly and that you don’t owe HMRC any money. Yes, you read that right. 

£100k+ = PAYE only income?

OK, stay with us. This might be a little confusing.

From April 2023, you had to file a tax return if you earned £150k+ in a tax year. This didn’t only come from PAYE income though. It could also be made up by self-employed income, property income, investment income etc.

Who needs to file a tax return?

With the £150k threshold, you’d have to do a tax return if you earned:

  • £150k from an annual salary ✅
  • £101k from an annual salary ❌
  • £101k from an annual salary, plus rental income ✅
  • £30k from an annual salary, plus £2k from self-employment ✅
  • £101k from rental income and freelancing work ✅

But from 2024/25, you only file a tax return if your income comes from multiple streams. If you earn £150k+ but it’s all from PAYE, you don’t file a tax return anymore. Woohoo!

What’s your adjusted net income?

Your adjusted net income is a fancy way of saying your total taxable income. Generally, this doesn’t include allowances or tax reliefs. But it does when it comes to the personal allowance. Classic.

As a result, the tax return that high-earners do is essentially to make sure that your adjusted net income is correct. Which it often isn’t on this salary! 

If your tax return reveals that you owe money to HMRC, you pay this before the tax return deadline on 31st January. HMRC will also change your tax code to reflect the correct taxing of your PAYE income. 

If you want to work out whether your tax code is right for your income, check out our tax code checker.

Your situation

Outlined number oneImage of an arrow
Tax code
Annual salary


Outlined number two
  • PAYE earnings

How your tax code is calculated

There are three main components that determine your tax code:

  • What you earn
  • Allowances you’re claiming
  • Your tax-free allowances

What next for £150k+ earners?

Basically it’s not you, it’s them. 

After you filed your 2022/23 tax return, PAYE only earners should have had an exit letter from HMRC, telling you that you no longer need to file. 

See ya 👋

We recommend that you check your tax code though and make sure you’re not being over or under charged from PAYE.

Don’t forget that if you earn money outside PAYE, you’ll still need to file, even if you earn less than £150k.

Will I stop losing the personal allowance?

Afraid not. That’s what makes this change even more mysterious. 

HMRC make a lot in tax from high earners, especially those unaware that they had to file a tax return in the first place. So it’s an unusual move to raise the threshold to file without also changing the circumstances that make filing necessary.

In a nutshell, you’ll still lose eligibility to the personal allowance when you start earning £100k+.

Confused or in need of some professional advice? Don’t forget you can book a one-off consultation with an accredited accountant for £119, all in. Learn more here

Why did this change happen?

Folks, who knows the inner workings of HMRC?

So far, the only information we’ve seen is from the agent update. It could be a precursor to HMRC automating how they taper the personal allowance through PAYE, but they’ve given no indication of this if it is on the cards…

Stay tuned!

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