No longer filing self assessment but still liable for extra tax?

[PoorPhaedra]

Hi all. I had some really good advice on here a few years back about self assessment and the £100,000-£120,000 tax trap so am hoping to get some thoughts on this new situation.

I recently learnt that the threshold for completing a self assessment has risen from £100,000 to £150,000. This happened in 2023 but I still received letters in 2024 and 2025 asking me to complete a self assessment. Each time I had a tax bill of around £4,500 to pay. To be clear, I only have PAYE income of around £115,000 and around £200 interest from a savings account. No other income or investments.

Since learning a few weeks ago that the threshold has risen and I no longer need to complete a self assessment, I rang HMRC who confirmed there is no need to complete one, advised I close my self assessment online account and sent a letter (at my request) to confirm this.

I’m confused though - the tax brackets haven’t changed so if I owed the money in previous years, surely I’ll owe in future years but will have no way to find out and risk being landed with a huge tax bill in 10 years time? It seems too good to be true that I no longer have to complete a self assessment and pay £4,000-£5,000 extra tax each year.

Foes anyone know whether this is truly the case or there a loophole that I risk falling into?

This is only possible to answer if you know why you had to pay the extra tax. It might simply be that your HR/Payroll team are using the wrong tax code and deducting too little tax from PAYE. You should still be able to access the calculations from last year that concluded you owed the extra. It could also be that the amount due last year was a carryover from the year before.

Do you receive any taxable benefits such as a car or medical insurance and have you ever declared charitable donations/gift aid?

Perhaps it’s been when your tax code hasn’t kept up with pay rises? I think if you’re not filing SA returns, it’s supposed to get captured via tax code adjustments over subsequent time periods but I think it’s very opaque. I also no longer need to do them, but I actually quite like the once a year check everything is in order.

Maybe it is the PAYE tax code not being up to date? No taxable benefits. I will post a photo of the calculation. The savings interest is a higher amount for last year as I saved for work on the house but that has now gone so no savings (other than ISA).

My only thought is that my basic salary is around £85k and I get a bonus every year that could be any amount between £0 and £20k so maybe HR aren’t able to preemptively know what the bonus will be and if that affects tax code?

I still complete a self-assessment even though I'm not required to. I want to declare savings interest, a little bit of gift aid and some business mileage and much prefer to pay it as I owe it rather than have it collected in my tax code. My accountant says I can keep my SA account open and keep filing if I want to so that's what I intend to do. I didn't think the £100-£125K threshold was accounted for via the tax code so yes you'll end up owing money each year surely.

Yeah that’s what I thought but when I spoke to HMRC the woman said numerous times that I no longer needed to complete one - I fully explained the circumstances (as I do not want to do the wrong thing) and she repeatedly told me to no longer complete one!

HMRC will still collect the correct tax through PAYE or asking for additional payments if necessary. You still have to inform them of all of your taxable income and it will be worked out in exactly the same way as on the self assessment form.

If you think you have been paying too much dispute it. But it should all be clearly laid out in your tax calculation. I think it's safer to do a self assessment even if you don't have to so you don't inadvertently not give all the information to HMRC and risk fines and worse. You don't pay less tax by not having to do a self assessment.

Thank you - I’m not sure how I would inform them of my income though if I don’t complete a self assessment? I’ve posted a photo above of my tax calculation (it maybe be under approval) and I’m not sure that it explains why I haven’t paid enough tax?

Send a letter giving your income and tax paid. But they should know anyway. The question is why wasn't it all paid out of PAYE? But it is definitely your responsibility to make sure they have the information. I would just carry on filling in the self assessment, much safer and probably just as easy as sending letters back and fore.

Being in a position of losing some but not all of your personal allowance is awkward for PAYE codes, especially when the amount changes each year. Please remember it’s on you (not your HR) to check your tax code is correct and if it’s not you should contact HMRC to update it.

Going forward if you come out of self assessment, HMRC will issue a P800 Simple Assessment after the end of the tax year and you can pay any outstanding tax online. The P800 route does work very well.

Another option would be to ask HMRC to remove your personal allowance from your PAYE code - it would mean overpaying tax throughout the year and then you would get a refund when they issue the P800.

Have you tried chat gpt. I posted my tax calcs in there and it was incredibly accurate and gave me all the reasons for my tax refund

Are you earnings steady throughout the year or are you receiving bonuses /commissions /overtime?

Tax codes don't cope as well in those situations as they usually have been set using prior years and trying to establish a 'norm'.

For 11 months of the year my salary is exactly the same - for one month of the year it includes my bonus (which varies each year). I have never gone above £125,000 and into the next tax bracket which is why I’d have assumed my PAYE should cope with the fluctuation as it is within the same bracket.

Going forward if you come out of self assessment, HMRC will issue a P800 Simple Assessment after the end of the tax year and you can pay any outstanding tax online. The P800 route does work very well.

Exactly this as @OneGreenSheep posted above.

I was told by HMRC that I no longer need to do a self-assessment because I’m under the £150k threshold and instead they sent me a tax demand after they did a Simple Assessment on my income. However, Simple Assessment means you only get a few months to pay your outstanding tax rather than have it taken off your next year’s PAYE code (which was my preference). Also make sure you check the Simple Assessment calculation carefully as mine was wrong and they tried to overcharge me significantly. It took hours and hours on the phone with HMRC to get this resolved. Turns out it was due to the problems transitioning people from Self Assessment to Simple Assessment (so not that simple after all!) and their IT systems getting a bit carried away. Made worse by Self Assessment and Simple Assessment being managed by completely separate teams. We got there in the end but it took a few weeks before I got a corrected tax bill and it was a stressful time worrying about the extra money they were demanding.

I’d learnt from past experience that HMRC can make mistakes (long story) so it’s important to keep good records and check everything yourself as you can’t just assume they’re correct.

The issue is likely to be that your regular PAYE earnings (salary) are under £100k, so you are entitled to the full personal allowance (all else being equal). But on earning over £100k you lose £1 of personal allowance for every £2 earned. So if your bonus takes you over £100k and is paid in March payroll it'll use whatever tax code you had for February payroll, even though the bonus might mean you are not entitled to the full personal allowance.

If you know your bonus amount well in advance you can update your estimated earnings for the tax year in the HMRC app and it'll generate an updated tax code for you in a few days

Has your salary increased since the previous year? If so it is more than likely due to the tax code applied by HMRC being incorrect for your salary because they can only adjust it when the tax year ends once they know your total income for the year. There is no need to complete a tax return for any income level if you are only on PAYE, the tax on your savings can be calculated by HMRC via your tax code.

It's not about the next tax bracket. In the month when you receive your bonus, the PAYE software system is going to calculate the wrong amount of tax. PAYE software is really only suitable for people who get paid the same amount every month.

People who earn less than £100,000pa get a tax free allowance of £12,570 which is allocated as £1,047.50 per month. If you earn the same every month it all works fine.

In the month that you get your bonus, you get your £7,085ish basic salary plus a £25,000 bonus and for that month the PAYE software will treat it as if you had an annual salary of £385,000 (ie as if you get that bonus every month) so you will pay a big whack of tax that month, but the system does not compensate for the fact that in the preceding 11 months you paid too little tax because you weren't actually entitled to the £1,047.50 tax free because it is withdrawn (gradually) when you go over the £100k mark

OK yes - that makes sense actually and would explain the reason why I have always owed tax. It sounds like the P800 route would be applicable which would make more sense than filling in pages of self assessment with only two sets of figures (PAYE and savings interest).

Does anyone know if HMRC will send the P800 form automatically or do I need to contact them again? It’s so weird they didn’t tell me about the P800 when I spoke to them and just told me to close my self assessment account!

It’s all automatic - your employer and banks will send the info to HMRC after the tax year and their super computer will send the P800 automatically. You just need to check the numbers are correct and pay the tax.

HMRC staff tend to be knowledgeable in their own departments but won’t know much about other depts/processes. Sometimes you can end up being passed from pillar to post trying to find the right person to help you.

I am in a similar position to you in that I earn between 100k and 125k with a single bonus payment changing each year, but without ever having done an SA

The last couple of years HMRC have written to me with details of my under payment given me the option to pay it off in one go, or have it collected in the following tax year through my tax code. I assume they will do the same to you

That’s all really helpful - thank you everyone. I’ve never been able to have the underpayment collected via tax code as it has always been just over the limit (around £3,000 if I remember rightly). It would be good if that became a possibility.

losing your personal allowance is hard to understand and especially when taking into consideration salary sacrifice and potentially making additional pension contributions

I found this calculator useful to plan my pension contribution and the net effect of salary sacrifice benefits would have on my personal allowance - https://apex-lifestyle.co.uk/paye/

Because HMRC gets paperwork from employers monthly now not just annually, and digital tech has improved they can collect the extra tax through your tax code in year now