Rising wages and frozen thresholds will mean thousands will need to register for Self Assessment for the first time
Taxpayers needing to register for Self Assessment for the first time will need to do so by 5 October or they increase their risk of incurring late filing penalties, accountancy and business advisory firm BDO has warned.
As a result of rising wages and frozen thresholds, BDO is warning that there are likely to be many thousands of parents who claim child benefit and who started earning over the £50,000 income threshold during the tax year, the point at which the High Income Child Benefit Charge starts to apply.
While the Government has announced plans to collect this charge through the tax code system in the future, this is highly unlikely to apply for the 2022/23 tax year, so those affected will need to register for Self Assessment.
The cost of living crisis has also prompted many people to seek alternative sources of income through ‘side hustles’ or freelance work and who will need to declare extra earnings via their tax return.
If, during the 2022/23 tax year, you were self-employed as a sole trader and earned more than £1,000, were a partner in a business partnership, had a total taxable income of more than £100,000 or if you met the criteria to pay the High Income Child Benefit Charge, you have until 5 October to register for Self Assessment if you haven’t done so before.
Dawn Register, Head of Tax Dispute Resolution at BDO said:
“Because of rising wages and frozen thresholds, many more people will have unwittingly passed the threshold at which they will be required to file a Self Assessment tax return for the first time.
“Although the online deadline for filing a return for the tax year 2022/23 isn’t until 31 January 2024, those who qualify for Self Assessment must register by 5 October 2023.
“One of the groups most at risk is parents who claim child benefit and who may have earned over £50,000 for the first time. They will find they are subject to the High Income Child Benefit Charge and will need to fill in a tax return.
“Those who have sought to supplement their income – for example by renting out property, selling goods online or taking on additional freelance work – may also find they need to register for Self Assessment.
“Unfortunately, ignorance is no defence, so it’s important that people register and file on time to avoid late filing penalties.
“Those affected will also need to have the funds available to pay the High Income Child Benefit Charge or any additional tax required by the 31 January deadline or they run the risk of incurring late payment interest. This is currently at 7.75%, the highest level for 15 years.”