HMRC is set to raise the Self Assessment tax return threshold from £1,000 to £3,000, a change expected to exempt nearly 300,000 taxpayers from filing annual returns. This policy shift aligns with the government’s broader strategy to modernise tax reporting and streamline HMRC operations, making it easier for individuals with extra income, or a ‘side hustle,’ to comply with tax regulations.

However, if your earnings exceed the new threshold by even £1, you will still need to file a return. While the new rules remove the requirement to submit a tax return for those earning under £3,000, tax must still be paid on any income exceeding £1,000. HMRC plans to introduce a simplified online service to facilitate these payments.

Understanding the threshold increase

HMRC recently announced the proposed change, outlining that the updated threshold will take effect within this Parliament, meaning it will be in place by 2029. The aim is to reduce the administrative burden on those earning income from activities such as online sales, dog walking, or content creation.

It is estimated that around 90,000 taxpayers will have no tax liability under the new threshold, while others will be able to manage their tax payments via a newly introduced online platform. This reform also acknowledges the growing number of individuals with multiple income streams, including online marketplace sellers whose earnings data has been shared directly with HMRC since 2024. By simplifying tax payments through digital services, the government aims to better support small traders and self-employed individuals while promoting entrepreneurship.

Get in touch

If you have any questions about how HMRC’s proposed changes may affect you, our expert tax team is here to help. Get in touch by emailing enquiries@pmm.co.uk.