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When you earn over £150,000 in a tax year, you need to file a high earner tax return with HMRC unless all of your income is taxed through PAYE. If you aren’t already registered for Self Assessment tax returns, you need to register by the 5th October following the tax year you had the income. RIFT can handle everything for you and avoid any tax return penalties.
A lot of people on higher incomes find themselves asking, “why do I need to submit a tax return?”
Well, if you're a high earner making over £150,000 per year, there’s a chance HMRC may want to take a closer look at your money. You may well be in a more complex position than most, with more than one source of income to consider. Getting it all properly accounted for sometimes means registering for Self Assessment and filing a yearly high earner tax return.
Up until the 2024/25 tax year, this was true even for people whose entire income was already taxed through the PAYE system. From the 6th of April 2024, however, that £150,000 threshold was removed altogether for them.
Before the 6th of April 2023, high earners making over £100,000 a year needed to file Self Assessment tax returns, even if all of their income was earned from employment and taxed via PAYE. This was because high earners often have more complicated tax situations. For example, earning over £100,000 starts chipping away at your tax-free Personal Allowance.
For the 2023/24 tax year, though, the high earner tax return threshold was raised to £150,000, meaning people could make an extra £50,000 before needing to file a Self Assessment tax return.
Starting from the 2024/25 tax year, the threshold was eliminated altogether for people earning all their income through PAYE. Keep in mind that things like rental income, interest and dividends can all count toward your total taxable income, if they go over the allowed tax-free thresholds:
No, you won't get taxed twice on the same income. However, if you don't know your way around the Self Assessment system, it's easy to get tripped up. Self Assessment comes with a lot of rules and tax return deadlines. If you need to register for it, you’ll quickly start stacking up tax return penalties if you get things wrong.
Even if you avoid the major Self Assessment pitfalls, it's still easy to end up paying too much tax. Depending on your circumstances, you might have allowable expenses that count against the income you're taxed on. A lot of people don't realise what they can claim for, or—even worse—try to claim too much.
When you or your partner are claiming Child Benefit on a high income, you can get lumped with a tax called the High Income Child Benefit Charge. The system’s a little tricky to get your head around, but the basics are:
The High Income Child Benefit Charge comes to 1% of the benefit amount for every £200 your (or your partner’s) income goes over the £60,000 threshold. This means that if one of you is earning £80,000, then 100% of your Child Benefit is getting eaten up in tax!
It makes no difference whether or not the child is yours. The High Income Child Benefit Charge can also apply when someone else is claiming Child Benefit for a child living with you. However, this only happens when the person making the claim is contributing at least an equal amount toward the child's upkeep.
When you or your partner is a high earner making over £60,000 a year, claiming Child Benefit means you get hit with the High Earner Child Benefit Charge. This means whichever of you is the higher earner will need to register for Self Assessment and pay the charge– even if all of their income is already taxed through the PAYE system.
Avoiding paying any tax you owe is against the law. If you or your partner claim Child Benefit while one of you earns over £60,000, you’ll need to sign up for Self Assessment and pay the High Income Child Benefit Charge in a high earner tax return.
Of course, if either of you earns over £80,000 a year, in real terms you’ll get nothing from your Child Benefit claim because 100% of it will be disappearing as tax. In that situation, there’s no real point in claiming it at all.
HMRC is going to want a full, detailed overview of the money you've got coming in and going out. That includes information on all your income sources (employment, interest, pensions, share dividends, etc.). You'll also be expected to declare any employment benefits you're getting. If you've got allowable expenses, the taxman's going to want to know about those too. It can be a lot to get to grips with if you're not used to it, and it's easy to drop the ball. Talk to RIFT if you need help or advice.
Absolutely! RIFT are the UK's leading tax experts, and our specialist Self Assessment tax return service is perfect for people with complicated tax situations. We can take care of the whole thing for you, working out your total taxable income and filing your returns. Our seasoned tax experts will save you money and keep you on the right side of HMRC. Get in touch to see how we can help.
When you earn over £150,000 per year, your tax situation can start to look very different from most people’s. For one thing, unless all of your money’s taxed through the PAYE system, you’ll have to start sending yearly Self Assessment tax returns to HMRC. On top of that, you’ll also find you aren’t getting the same kind of tax-free Personal Tax Allowance as lower earners.
Here’s how that works. Most taxpayers can earn up to a certain threshold before paying any Income Tax. For the 2025-26 tax year, for instance, you can earn up to £12,570 tax-free in a year. However, every £2 you earn over £100,000 in a year will cost you £1 from your Personal Allowance, meaning you’re paying tax on more of your income than before. By the time your income hits £125,140, you’ve lost your entire tax-free Personal Allowance.
The top rate of tax in the UK is 45%, which is only paid by people earning over £150,000 (as of 2021/22). Despite this, you might have heard people talking about the “60% tax rate”. Basically, this figure comes from the chipping away of your Personal Allowance when you earn over £100,000. For instance, earning £1,000 over that threshold not only brings a tax charge of 40% (£400), but also knocks £500 off your Personal Allowance, meaning you pay another £200 in tax. All told, you’ve paid out £600 more tax for earning that £1,000—an effective tax rate of 60%.
There are ways of bringing down the tax you owe when you’re in this situation, like donating to charity or boosting your pension contributions. See our article, “How Earning £100K Affects your Personal Allowance” for more information.
26th February 2025
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