Government to Raise Income Threshold for Self-Assessment Reporting and Launch Simple Online Tax Payment System

Move expected to reduce administrative burdens for up to 300,000 taxpayers

The Government has announced its intention to raise the income threshold at which individuals are required to register for Self-Assessment. This change will affect taxpayers with low levels of trading, property, or miscellaneous income and forms part of a broader package aimed at simplifying the UK tax system under HMRC’s “Plan for Change.”

Key Change: Income Reporting Threshold to Increase to £3,000

Currently, individuals must register for Self-Assessment if they receive more than £1,000 in gross trading income. The Government now plans to increase this threshold to £3,000 gross before the end of the current Parliament.

In line with this change, the £3,000 threshold will also be applied to two other categories:

• Property Income – replacing the existing threshold of £2,500 in profit or £10,000 in gross income.
• Other Taxable Income – increasing from the current threshold of £2,500.

This alignment is expected to simplify compliance and reduce the number of individuals required to file tax returns solely due to modest additional income.

Estimated Impact

The Government anticipates that approximately 300,000 taxpayers will benefit from the change. Of these, an estimated 90,000 individuals will have no tax to pay at all and will no longer need to report minor income streams to HMRC.

A Simpler Way to Pay

Importantly, the change in reporting thresholds does not eliminate tax liabilities. Some individuals below the £3,000 limit may still owe tax. To address this, HMRC is developing a new online service to enable affected individuals to report and pay any tax due without needing to complete a full Self-Assessment tax return. Further details on this service will be released later in the year.

Broader Reforms Under the “Plan for Change”

Alongside the income threshold changes, HMRC has outlined additional measures aimed at modernising tax administration and enforcement. These include:

• Simplifying the Temporary Admission customs procedure for temporary imports.
• A digital pilot with US Customs and Border Protection to streamline trade processes.
• Strengthening efforts to combat phoenixism, where directors dissolve companies to avoid tax liabilities.
• Introducing a reward scheme to incentivise informants to report tax fraud.
• Using generative AI to guide users to relevant content on GOV.UK.
• Voice recognition trials for secure account access.

What This Means for Taxpayers

These changes represent a significant step toward reducing compliance burdens for those with limited additional income while still ensuring tax due is collected through more accessible digital means.

Taxpayers who previously filed due to minor sources of income should watch for future announcements from HMRC regarding the launch of the new online payment system and changes to eligibility for Self-Assessment.

Gavin Anderson
Tax Advisor

For more information, please contact us at: consultancy@vantagefeeprotect.com