So you’ve recently hit the £100,000 milestone? You might be wondering whether you now have to complete a Self-Assessment tax return, especially if you’re used to paying tax through PAYE.
Earning over £100,000 doesn’t always mean you must automatically file a return, but it does put you in a category where tax is a little more complex. Your personal allowance starts to reduce, you may be receiving untaxed income elsewhere, or you might be affected by the High Income Child Benefit Charge, all of which may require you to submit a tax return.
In this blog, we’re helping you understand what happens when you start earning a six-figure salary, what to watch out for and how you can stay compliant.
Need personalised advice? Contact Treetops today.
Why high earners may need to complete a tax return
If your total income is over £100,000 and earned through PAYE, this alone is not a reason to complete a tax return. But reaching this income level often brings added complexities.
Many high earners receive other income from property, investments, or dividends. And if you have to pay the High Income Child Benefit Charge (and it’s not automatically deducted through PAYE). You can repay child benefit online without filing a tax return by filling in the form on HMRC’s website. If you are not required to file a Self-Assessment tax return for any other reason, you can also ask HMRC to adjust your tax code to collect the estimated HICBC liability from your salary throughout the year.
Crossing the £100,000 mark also reduces your tax-free personal allowance. Your tax code alone may not reflect this change accurately, which could leave you underpaying tax without realising it.
You will need to submit a Self-Assessment tax return if you:
- Are self-employed with an income over £1,000
- Receive £1,000 or more in untaxed income (e.g., from rental property)
- Need to pay tax on dividend income that cannot be collected via your tax code (e.g., if it exceeds £10,000)
- Are a partner in a business partnership
- Need to pay the High Income Child Benefit Charge.
- Have foreign income to declare
You can also claim tax relief on pension contributions here if you are not required to file a Self-Assessment tax return for any other reason.
Income Tax rates
For the 2025/26 tax year, the Income Tax rates and thresholds are as follows:
| Band | Taxable income | Tax rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The Income Tax rates look a little different if you live in Scotland. See Scottish tax bands here:
| Band | Taxable income | Scottish tax rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Starter rate | £12,571 – £15,397 | 19% |
| Basic rate | £15,398 – £27,491 | 20% |
| Intermediate rate | £27,492 – £43,662 | 21% |
| Higher rate | £43,663 – £75,000 | 42% |
| Advanced rate | £75,001 – £125,140 | 45% |
| Top rate | Over £125,140 | 48% |
Will Making Tax Digital affect high-income earners?
Making Tax Digital (MTD) only affects how self-employed individuals and landlords with income over certain thresholds pay tax. For more information, check out our Making Tax Digital page.
If you’re concerned about how MTD will affect you, the expert team at Treetops can help you choose the right system and stay compliant every step of the way.
How Income Tax works when you earn over £100,000
Reaching a six-figure income brings some important tax implications that many high earners don’t anticipate. One of the key changes is how your personal allowance is affected.
As your income rises above £100,000, the amount of tax-free income you’re entitled to starts to shrink, which can increase your effective tax rate. Understanding this upfront can help you plan ahead.
How does earning over £100,000 affect my personal allowance?
If you earn more than £100,000, you may get caught up in what’s known as the ‘60% tax trap’. Once your income passes this threshold, you start losing your tax-free personal allowance (£12,570). It’s reduced by £1 for every £2 you earn over £100,000.
You’re effectively taxed at 60% on income between £100,000 and £125,140, because for every £2 you earn in this range, you not only pay 40% higher-rate tax but also lose £1 of tax-free allowance.
For example, if you earn £110,000, your allowance falls by £5,000 (half of the £10,000 you earn over the limit), leaving you with just £7,570 tax-free. Once your income reaches £125,140, your personal allowance is removed completely, and you’ll pay tax on all your earnings.
Some people choose to make additional pension contributions or enter into salary sacrifice schemes to reduce their taxable income and ease the impact of the tax trap.
Will I still need to submit a tax return even if I pay my taxes through PAYE?
Even if all your income comes from employment, your PAYE tax code may not adjust automatically once your earnings exceed £100,000. As a result, you might owe additional Income Tax without realising it.
Submitting a Self-Assessment tax return ensures your total income, allowances, and any deductions (like pension contributions) are correctly calculated.
HMRC may also send you a notice to file a return if they believe your circumstances meet the criteria listed for Self-Assessment. But even if they don’t, you’re still legally responsible for ensuring your tax is paid correctly.
What is the High-Income Child Benefit Charge (HICBC)?
For the 2025/26 tax year, if you or your partner receives Child Benefit and one of you has an ‘adjusted net income’ over £60,000, you will be liable for the HICBC.
The charge is designed to claw back the Child Benefit received. It is calculated as 1% of the total Child Benefit for every £200 of income you have over the £60,000 threshold.
Here’s what that looks like:
| Income between £60,000 and £80,000 | You’ll repay a portion of the Child Benefit |
| Income over £80,000 | You’ll repay the full amount of the Child Benefit |
The charge is assessed on the higher-earning partner, regardless of who receives the benefit payment.
To avoid the charge, you can opt out of receiving Child Benefit payments.
We recommend you register for child benefit but opt out of receiving the payments if the higher earner earns over £80,000. This protects your State Pension credits if you are a non-earning parent and ensures your child automatically receives their National Insurance number at age 16.
Looking for Self-Assessment support? Contact us
At Treetops Chartered Accountants, we specialise in helping high-earners and professionals stay compliant and pay Income Tax correctly.
If you’ve recently crossed the £100,000 income threshold, or you’re unsure whether you need to complete a Self-Assessment return, we’ll help you review your income and tax position, check whether your tax-free allowance has been affected, and help you submit your tax return on time.
We’re here to make your personal taxes simple and stress-free so you can focus on your career and life.
Call Treetops Chartered Accountants today on 01252 541 401 or send us a message online, and let’s tackle your taxes together.
Frequently asked questions about high-income Self-Assessments
What if I don’t complete a tax return when required?
If you’re asked to file a Self-Assessment tax return and don’t, or you miss registering when you should have, HMRC can issue penalties and charge interest. Even if you think everything’s covered through PAYE, it’s still your responsibility to make sure all your income has been taxed correctly.
If you’ve missed a deadline or received a letter from HMRC, contact Treetops as soon as possible, and we’ll help you get things sorted quickly.
