Changes in personal circumstances or in tax policy may mean that a person is brought within ITSA for the first time, or returns to it for 2024/25, or that they are no longer obliged to submit a tax return. In each case, it is important that appropriate action is taken by the deadline in order to avoid a penalty.

Joining ITSA

A taxpayer who has not previously registered for ITSA must tell HMRC by 5 October 2025 if they need to complete a tax return for 2024/25. The easiest way to check if a tax return is needed may be to use HMRC’s online tool. This takes the user through the ITSA criteria (summarised below). HMRC may charge a penalty where they are notified after 5 October 2025. 

If a tax return is needed, the taxpayer can register for ITSA:

• by registering online or filling in form SA1 and then printing it and posting it to HMRC; or
• if they are self-employed, by setting up a business tax account and selecting ‘Add a tax to your account to get online access to a tax, duty or scheme’. The taxpayer also has the option of using form CWF1. 

The process is different for the self-employed as it also registers them for class 2 national insurance contributions (NIC). Class 2 NIC credits can help the person qualify for certain state benefits, including the state pension. The requirement to pay class 2 NIC was abolished from 2024/25. Where the person’s profits from self-employment are equal to or more than the small profits threshold (£6,725 for 2024/25), they get a full class 2 NIC credit. It is possible to pay class 2 NIC voluntarily through self assessment, where profits are below the small profits threshold.

Different arrangements apply in some circumstances, for example, for registering partnerships and partners for self assessment and class 2 NIC. 

HMRC has published guidance for taxpayers on authorising someone to act on their behalf and for agents on registering a client for ITSA.

Returning to ITSA

A taxpayer returns to ITSA where:

• they have previously registered for ITSA; or
• they did not, and were not required to submit a tax return for 2023/24; and
• they intend to submit a tax return for 2024/25. 

In this case, the taxpayer should reactivate their ITSA account before submitting their tax return for 2024/25. HMRC’s guidance explains how to do this. There is a different process for self-employed taxpayers. 

Leaving ITSA

A taxpayer that receives a notice to file a tax return for 2024/25 may wish to check that they are required to do so by satisfying the self assessment criteria (see below). It may be that, due to a change in their circumstances or to the criteria, they were required to submit a tax return for 2023/24 but are not required to do so for 2024/25. 

Simple assessment

HMRC may issue a simple assessment to collect tax that cannot be collected through ITSA or pay as you earn (PAYE). If a taxpayer has submitted, or intends to submit, a tax return for 2024/25 and they receive a simple assessment for that year, they or their agent should contact HMRC to have the simple assessment withdrawn.  

ITSA criteria

A taxpayer is required to file a tax return for a tax year if they meet any of the criteria for that tax year. These include the following for 2024/25 based on HMRC’s guidance: 

• Self-employment income over £1,000.
• Rental income over £2,500 net (ie, after deducting allowable expenses) or £10,000 gross.
• Income from savings or investments over £10,000.
• Income from dividends over £10,000.
• Other untaxed income of £2,500 or more.
• Claims for tax relief for employment expenses of more than £2,500.
• Liability to the high income child benefit charge (HICBC), if the client is not using the new HICBC PAYE service.
• Capital gains in excess of £3,000 or if the value of the assets disposed of are in excess of £50,000. Capital gains tax changes (CGT) for 2024/25, including the in-year rate change and the reduction of the CGT-free annual exemption to £3,000 (this will be discussed in more depth in a later article in the series). 

See HMRC’s guidance for full details of the criteria. Note that the focus here is on completing a tax return. A taxpayer that has untaxed income below the ITSA thresholds may still need to contact HMRC and arrange collection of the tax. Also, a taxpayer that does not meet any of the criteria can register for ITSA voluntarily.