How are UK Self Assessment rules changing for high earners in the 2024/25 tax year?

Understanding what “high earner” means in Self Assessment terms

In everyday conversation, “high earner” might simply mean someone on a big salary. For UK Self Assessment (SA), it’s more useful to think in terms of what creates complexity or extra tax charges. High earners are more likely to have multiple income streams, to bump into rules that only bite at higher income levels, and to face tapered allowances or special charges that HMRC often collects through the Self Assessment system.

In the 2024/25 tax year (6 April 2024 to 5 April 2025), the fundamentals of Self Assessment remain familiar: you report your taxable income and gains, claim reliefs, and settle any balancing payment by the January deadline. But for high earners, the “rules changing” question is really about a cluster of shifts that affect what you must report, how much tax you pay on investment income and gains, and how business profits get allocated to tax years. There are also practical and administrative changes that affect how high earners manage payments and avoid penalties.

Self Assessment in 2024/25: what hasn’t changed, and why it still matters

Before diving into the changes, it helps to anchor what has not changed. The Self Assessment process still works broadly the same way. If you are required to file a return (or choose to file because you need to claim relief or report something HMRC can’t fully collect through PAYE), you submit details of income, allowances, reliefs, and capital gains. HMRC then calculates what’s owed, or you calculate it yourself through software and submit the figures. The usual deadlines still matter: 31 October after the end of the tax year for paper returns, 31 January for online returns, and 31 January for paying any tax due for that year (along with the first payment on account if it applies). A second payment on account is generally due on 31 July.

For high earners, Self Assessment continues to be the “clearing house” for items such as: untaxed income; dividends and interest above allowances; rental profits; partnership or sole trader profits; capital gains; pension-related tax charges; the High Income Child Benefit Charge; and the repayment or restriction of allowances (for example, where your adjusted net income pushes you into thresholds that change how much relief you get). Even if your main income is taxed under PAYE, you can still end up needing Self Assessment because one extra element applies.

The biggest structural change affecting some high earners: basis period reform is fully in effect

One of the most significant “rules changes” around 2024/25 is not aimed only at high earners, but high earners are disproportionately affected because they are more likely to run businesses, be partners in firms, or have complex arrangements. Basis period reform changes how trading profits for unincorporated businesses (sole traders and partnerships) are matched to tax years.

Historically, many unincorporated businesses were taxed on a “current year basis” that depended on the accounting year end you chose. That meant the profit taxed in a given tax year could relate to an accounting period ending in that year, rather than profits actually arising strictly within the tax year itself. For businesses with year ends that weren’t 31 March or 5 April, this could create planning opportunities and complexity—especially when profits were rising.

From 2024/25 onwards, trading profits are generally taxed on a tax-year basis. In plain terms, you are taxed on the profits that arise in the tax year (6 April to 5 April), regardless of your accounting date. If your accounts are made up to 31 March or 5 April, the transition is often smooth because the accounting year aligns closely with the tax year. If your accounts end on another date—say 30 June, 30 September, or 31 December—you will need to apportion profits from two sets of accounts to arrive at the tax-year figure.

High earners in professional services partnerships and fast-growing sole trader businesses can feel this change more acutely because their taxable profits can be large and because any acceleration of profits into earlier tax years affects cash flow and payments on account. The key practical implication is that your tax return computations may become more technical, and your tax payments may become less predictable unless you plan carefully.

A related feature is transitional profit spreading. Many businesses had a “transition year” where extra profits were brought into charge, with the ability to spread that transitional profit over multiple years. In 2024/25, businesses may still be paying tax on the spread portion that began earlier, depending on the circumstances. For high earners, this can push income into higher bands, interact with the loss of allowances and reliefs, and raise the importance of forecasting adjusted net income.

Dividend allowance reduction: a quiet change that hits high earners hard

High earners are more likely to have meaningful dividend income, whether from investment portfolios, family companies, or managed service companies. The dividend allowance has been shrinking, and for the 2024/25 tax year it is lower again. A smaller allowance means more dividend income is taxable, even if you previously stayed within a “tax-free” cushion.

This change matters for Self Assessment because dividends often aren’t fully “settled” via PAYE. If you have dividend income beyond the allowance and it isn’t otherwise accounted for, you may need to report it through Self Assessment. Even where HMRC tries to adjust tax codes to collect tax on dividends, that approach can be imperfect—especially when dividends vary year to year.

For high earners, the effect is not only about paying more dividend tax. More taxable dividend income can also increase your adjusted net income, which affects other thresholds and charges, such as the tapering of the personal allowance and the High Income Child Benefit Charge. That is why the dividend allowance reduction can have a “multiplier effect” for some people: it doesn’t just increase tax on dividends; it can also trigger or worsen other liabilities.

Capital Gains Tax annual exempt amount: reduced again, making reporting more common

Another major change impacting high earners in 2024/25 is the reduced Capital Gains Tax (CGT) annual exempt amount. High earners are more likely to have investment disposals, second homes (not covered by the main residence exemption), carried interest (in some cases), or share transactions linked to employment or business interests.

A lower annual exempt amount means that gains you once ignored can now create taxable CGT. It can also bring more people into reporting requirements. Even if you end up owing no CGT because of losses, reliefs, or careful planning, you may still have to report disposals if total proceeds exceed the relevant reporting thresholds or if tax is due.

From a Self Assessment perspective, this change increases the chance that high earners will need the Capital Gains pages completed. It also increases the importance of record-keeping: acquisition costs, allowable expenses, pooled share calculations, and evidence for reliefs such as Business Asset Disposal Relief (where applicable). With a smaller exempt amount, the margin for error narrows, and the cost of missing a detail grows.

The High Income Child Benefit Charge: threshold changes reshape who needs Self Assessment

A headline change in 2024/25 affects families where one partner has a higher income and Child Benefit is claimed. The High Income Child Benefit Charge (HICBC) historically began when adjusted net income exceeded a lower threshold and tapered up to a higher threshold, after which the charge effectively clawed back all Child Benefit received.

For 2024/25, the thresholds are higher than before, which changes the picture for many households. Some people who previously had to deal with the charge may now fall outside it, and others may face a smaller charge. High earners will still be in scope if their adjusted net income is high enough, but the group of people affected expands and contracts based on income levels, pension contributions, charitable giving, and other adjustments that influence “adjusted net income.”

Why does this matter for Self Assessment rules? Because HICBC is commonly dealt with through Self Assessment. If you (or your partner) receive Child Benefit and you have adjusted net income in the charge range, you may need to submit a Self Assessment return to pay the charge, even if you have no other reason to file. In households where the higher earner’s income is volatile—bonuses, dividends, commissions—the need to file can switch on and off across years, which makes 2024/25 planning especially important.

For high earners, a key practical change is the need to revisit assumptions. Some taxpayers stopped Child Benefit claims entirely to avoid the charge. In 2024/25, depending on income and household circumstances, restarting a claim (or using the option to receive the entitlement without payments, to preserve National Insurance credits) may be worth reconsidering. The Self Assessment angle is that you want to avoid filing unnecessarily, but you also want to avoid underpaying a charge that is due.

Personal allowance tapering remains a major “hidden” high-earner issue

Not every impactful rule is “new” in 2024/25, but it’s worth addressing because high earners often interpret “rules changing” as “why does my tax feel different this year?” The personal allowance taper is still one of the most significant drivers of unexpected liabilities for people with adjusted net income above the relevant level. As your income rises beyond that point, the personal allowance is gradually withdrawn, creating an effective marginal tax rate that can feel punishing.

While the taper mechanism itself is not a fresh change for 2024/25, it interacts with the year’s changes in dividend allowance, CGT exempt amount, and business basis period reform. In other words, even if the taper rule is the same, the amount of income dragged into “adjusted net income” may be different, and that is what catches high earners out. Self Assessment is often where this becomes visible, because the return calculation makes the loss of allowance explicit.

Additional rate and band thresholds: why high earners should still check their position

High earners are typically sensitive to where income falls across tax bands. While the existence of the additional rate and the general band structure is familiar, small shifts in taxable income can have outsized effects when you are near a threshold. For 2024/25, many taxpayers find that thresholds feel “tighter” in real terms because allowances and bands do not necessarily rise in line with wages or inflation.

For Self Assessment, the practical consequence is that the same bonus or dividend that felt manageable a few years ago can now push you into a higher band, or deepen the impact of the personal allowance taper, or increase exposure to the HICBC. The rule you should take from this is simple: don’t treat last year’s tax outcome as a reliable predictor for 2024/25. The direction of travel for allowances (dividends and CGT) means more income is exposed to tax, and high earners are more likely to be in the affected zone.

Pensions in 2024/25: allowances, reporting, and why high earners should pay attention

Pensions are one of the most important planning tools for high earners, but they are also an area where rules evolve and where Self Assessment sometimes becomes the reporting mechanism for charges or relief claims. The annual allowance regime and the way relief is delivered can be especially relevant if you are a member of a defined benefit scheme, receive employer contributions, or have variable income.

High earners should watch three Self Assessment pinch points:

First, claiming higher/additional rate relief. If you contribute to a personal pension under “relief at source,” the pension provider adds basic rate relief, but any extra relief due at higher or additional rates is typically claimed through Self Assessment (or sometimes via an adjusted tax code). If your income is high and your contributions are material, failing to claim the extra relief can be costly.

Second, pension annual allowance charges. If your total pension inputs exceed your available annual allowance (taking account of carry forward where available), you may face an annual allowance tax charge, which is often reported through Self Assessment. High earners are more likely to have complex pension input calculations, and those in defined benefit schemes can be surprised by “pension input amounts” that do not resemble a simple contribution figure.

Third, lifetime-allowance-era issues transitioning into new rules. Even though the lifetime allowance framework has been changing, the practical point for Self Assessment is that lump sums and certain pension events can still have tax consequences and reporting requirements. For high earners approaching retirement, taking advice on how pension events interact with income tax, lump sums, and reporting is more important than ever.

Payments on account: why 2024/25 changes can distort your cash flow

Payments on account are not a new concept, but they often become a bigger issue in a year where taxable income composition changes. If your Self Assessment bill (excluding most PAYE tax) exceeds the relevant threshold, HMRC usually requires payments on account toward the next year’s bill. These are based on the previous year’s liability, split into two instalments (January and July).

In 2024/25, high earners may see their payments on account become “wrong-way” indicators for cash flow because of the changes discussed above. For example:

If basis period reform alters the timing of taxable profits, a business owner may face a larger bill in one year and different profits in the next, making payments on account feel too high or too low compared to reality.

If the dividend allowance reduction increases taxable dividend income in 2024/25 but you later reduce dividends in 2025/26, payments on account for 2025/26 could be excessive.

If you have a one-off capital gain in 2024/25 that creates a large balancing payment, it may not always feed into payments on account in the way you expect, but it can still impact your overall cash requirement around January.

High earners should consider proactively reviewing whether to make a claim to reduce payments on account where it is reasonable and accurate to do so. The key word is accurate: reducing payments on account too aggressively can lead to interest on underpaid amounts.

Penalty and interest regimes: administration matters more when the numbers are bigger

When tax liabilities are large, small administrative missteps can become expensive. The Self Assessment late filing penalty structure (with automatic penalties and further penalties as delays continue) is well known, but high earners often face additional pain from late payment interest and potential penalties linked to inaccurate returns.

In 2024/25, the practical “change” is less about brand-new penalties and more about HMRC’s increasing emphasis on timely, digital compliance and the compounding effect of interest. With higher interest rates than the ultra-low environment many taxpayers became used to, the cost of paying late can be materially higher than it used to feel.

For high earners, a good discipline is to separate the compliance timeline (filing the return) from the cash timeline (paying what’s due). Even if you plan to file later in the cycle, you can often estimate liability and set funds aside. Where income is volatile, building a buffer is usually safer than trying to hit the exact number at the last moment.

Who must file in 2024/25: high earners often assume they’re “automatically” in Self Assessment

A common misconception is that a high salary alone automatically forces you into Self Assessment. In practice, whether you must file depends on HMRC’s criteria and on your personal circumstances. Many high earners do file because they have additional complexities, but the key point is that Self Assessment is triggered by factors such as untaxed income, self-employment, partnership income, rental income, capital gains, certain charges (like HICBC), or the need to claim certain reliefs.

For 2024/25, the most important “rule change” mindset is: don’t assume you’re in or out. Review your income sources and household situation. A change in dividend allowance or CGT exemption can move you into a filing position even if you previously stayed below thresholds. Similarly, a change in HICBC thresholds can move you out of a filing position if HICBC was your only reason to file—provided you truly have no other filing triggers.

Employment-related complexity: bonuses, benefits, and share schemes

High earners are more likely to receive remuneration in forms that don’t behave like a simple monthly salary. Large bonuses can distort adjusted net income and interact with thresholds. Benefits in kind (such as company cars, medical insurance, and certain reimbursed expenses) are often taxed through PAYE but can still create questions when figures are wrong, when benefits are processed late, or when you have multiple employments.

Share-based remuneration can be especially important. Depending on the type of scheme and the way it is reported, you may need to include information in Self Assessment about employment-related securities, exercise of options, or disposal of shares. Even when tax is withheld at source, Self Assessment can be used to reconcile the position, claim reliefs, or report capital gains on disposal. The 2024/25 reductions in the CGT exempt amount raise the likelihood that a disposal that once fell under the exemption is now taxable.

Property income: why high earners should re-check rental reporting and finance cost restrictions

High earners often invest in property, and Self Assessment is the standard route for reporting rental profits. While the broad framework for rental income is stable, the practical tax outcome can still change year to year because of finance cost restrictions, changes in mortgage rates, and the way losses are carried forward.

In 2024/25, high earners should pay attention to the interaction between rental income and adjusted net income thresholds. Even if rental profits are modest relative to salary, they can be the “last straw” that pushes adjusted net income above a taper point. With the personal allowance taper, small increments can have disproportionate consequences.

Non-domicile rules and international aspects: a watch-out rather than a single switch

High earners are more likely to have international ties: overseas workdays, foreign investment income, or a residence and domicile profile that requires careful handling. The UK’s approach to taxing foreign income and gains can be complex, and changes can be announced and phased over time.

For 2024/25, the key Self Assessment point is that international complexity increases the importance of getting the right pages completed and understanding the interaction between foreign tax, double taxation relief, remittances (where relevant), and reporting obligations. Even where the underlying rules have not “suddenly changed” on a single date, HMRC scrutiny and the cost of error are higher when international income is involved.

Practical steps high earners should take for the 2024/25 return

If you want to navigate the 2024/25 landscape confidently, focus on a few high-impact habits:

1) Track adjusted net income intentionally. High earners are often surprised by charges and allowance losses driven by adjusted net income. Create a simple tracker that includes salary, bonuses, benefits, dividends, interest, rental profits, and any other taxable income, and then subtract items that reduce adjusted net income such as qualifying pension contributions and Gift Aid donations. You don’t need to calculate tax daily, but you do need to know which thresholds you are heading toward.

2) Review whether Self Assessment is required early. If HICBC applies, if you have dividends above the allowance, if you have disposals that may create CGT, or if you have self-employment/partnership income, you likely need to file. Identifying this early prevents a scramble later and gives you time to gather records.

3) If you’re affected by basis period reform, plan the computation. If your business accounts don’t end on 31 March or 5 April, you may need apportionment across accounting periods. This is not just a technicality; it affects cash flow and payments on account. Build forecasting into your year rather than treating the tax return as an afterthought.

4) Don’t underestimate dividends and capital gains. With a smaller dividend allowance and a smaller CGT annual exempt amount, you may need to report (and pay) when you previously did not. Keep brokerage statements, acquisition records, and notes on corporate actions.

5) Pension relief and charges: reconcile carefully. Make sure you claim the right relief where appropriate, and confirm whether any annual allowance charge might apply if your pension inputs are high or complex. If you rely on carry forward, document your calculations.

6) Manage payments on account proactively. If your income is volatile, don’t be surprised by payments on account that don’t fit your current year profile. Consider whether a reduction claim is appropriate, but avoid guessing. The goal is to be accurate, not optimistic.

Common 2024/25 scenarios for high earners, and what changes in practice

To make the changes more concrete, here are a few scenarios that frequently apply to high earners in 2024/25:

Scenario A: PAYE salary plus dividends. A high earner with a large salary and a modest dividend portfolio might have ignored dividends in the past if they were covered by the allowance. With the allowance reduced, the same dividend stream can now be taxable, increasing the chance of needing Self Assessment or at least creating an underpayment if not captured elsewhere.

Scenario B: Partner in a firm with a non-tax-year accounting date. A partner whose profit share is substantial may see the move to tax-year basis significantly change how profits are allocated to the year. The calculation becomes more involved, and transitional elements can continue to influence liabilities. Cash flow planning becomes a core part of compliance.

Scenario C: Family claiming Child Benefit. If one partner’s income fluctuates around the HICBC thresholds due to bonuses, dividends, or self-employment profits, 2024/25 threshold changes can materially alter whether a charge is due and whether a return is required. Planning pension contributions or Gift Aid can be particularly valuable where it legitimately reduces adjusted net income.

Scenario D: One-off disposal of shares or an investment property. With a reduced CGT exemption, a disposal that might once have been fully covered can now lead to a CGT bill and a need to complete capital gains reporting. The tax cost of rebalancing portfolios is therefore higher, and record-keeping becomes even more important.

What “changing rules” means in reality: more people are pulled into reporting

If there is a single theme for high earners in 2024/25, it is this: the system is increasingly less forgiving of “small” investment income and “moderate” gains because allowances are smaller. That pulls more people into Self Assessment reporting, increases the value of good records, and makes threshold management more important.