Beware if you earn +£100k

If you’re in full-time employment, tax tends to be a little less complicated than those who own their own business or are self-employed. Generally your tax objections are taken care of through PAYE (pay as you earn), without the need to fill-out a self-assessment tax return. However, this changes when you are in the position of earning more than £100,000.

Recently, somebody called us when they had received an unexpected letter from HMRC asking them to submit a tax return. They thought they were covered by PAYE and were confused. However, a quick chat revealed that they were now earning in excess of £100,000, so we were able to explain that they are required to complete a tax return.

We were able to help them and, in most cases, it isn’t too complicated to complete a tax return if you are employed. However, there could be expenses which can be claimed – such as a working from home allowance – so it’s worth looking at that.

Your Personal Allowance (currently £11,850) goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above. If you do not usually send a tax return, you need to register by 5 October following the tax year you had the income.

If you’ve received an unexpected letter from HMRC – about any tax related matters – then do get in touch on 01892 513515.