Do you still have to file a tax return if you don’t owe any tax?
Even if you do not owe the taxman any money, failure to complete and submit your tax return could result in a penalty costing you up to £1,600.
The self-assessment deadline is looming as around 5.85 million people still need to file their tax return for the 2024/25 tax year before the 31 January deadline, according to figures from HMRC on 5 January.
But some people do not realise that you still need to fill out a self-assessment tax return even if you do not owe the taxman any money.
Even if you did not earn enough money to owe tax to HMRC, anybody who earns over £1,000 from something other than payrolled work must fill out a tax return and provide their details to the taxman.
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This quirk of the tax system means that even if your total income in a given tax year falls below the £12,570 income tax personal allowance, you are still required to fill out a tax return.
Hundreds of thousands of people have already been caught out by this. Between 2018 and 2023, more than 600,000 people had to pay a fine of at least £100 for sending in their tax returns late despite owing £0 in tax.
Under current rules, if you did not earn enough money to owe any tax and you are late to file your tax return, you will be ordered to pay a fine of £100.
However, once the tax return filing is three months late, the fine swells by an extra £10 a day for the next 90 days (up to a maximum of £900 in addition to the original fine) for someone who owes £0 in tax.
Once the tax return is six months late, the penalty grows by a further £300. After 12 months, £300 more is added to the fine.
The way that late filing fines snowball means that a low-earner who owes nothing to the taxman but does not know or forgets to file a tax return could theoretically be fined up to £1,600 after 12 months of not acting on the late tax return. Interest is also added on top.
Dan Neidle, founder of Tax Policy Associates, called the policy “unjust” and urged the government to act and “stop the most vulnerable in society having their lives made harder by HMRC.”
Neidle added that the government should go further, saying: “Nobody should face a late filing penalty when they don’t owe any tax.
“This is one tax reform that should be easy for any Labour Chancellor. The cost would be less than £6m per year.
“There would be a real benefit to some of the poorest and most vulnerable in society,” he added.
When do you have to fill out a tax return?
You are required to fill out a self-assessment tax return if you earn £1,000 or more in a tax year through any source other than PAYE employment.
This means that even if your total income is below the £12,570 tax-free personal allowance you still have to file a tax return.
You will also have to fill out a tax return if you have any untaxed income, such as rental income, tips and commission, foreign income, or income from savings and investments
If you were a partner in a business during a given tax year, had to pay capital gains tax, or you had to pay the high income child benefit charge, you will also have to submit a tax return.
If you are unsure whether or not you have to file a tax return on your level of income, the government has an online portal that helps you work out if you need to send a self-assessment tax return to HMRC.
It is also worth noting that if you have previously filed tax returns but no longer need to, for example if you used to be self-employed but are now employed by a company, you will need to notify HMRC of this.
You can do this by filling out an online form on gov.uk to close your self-assessment account and ask to be removed from self-assessment for a specific tax year.
If you do not do this before the self-assessment deadline, then HMRC is able to fine you if you do not fill out a tax return.
How to file a tax return
For those who have never done it before, filing a tax return could be intimidating. Even those who have done it for years can find completing their self-assessment tax return a daunting task.
This being said, the actual process of filing the tax return is relatively streamlined. First you register with HMRC, then gather your documents, and then complete the form, submit it, and pay your tax bill.
For more information, and a step by step guide, read our guide to how to file your tax return.
When is the tax return deadline?
The deadline to file your tax return for the 2024/25 tax year is 31 January if you plan to complete it online.
Those who wished to fill out a paper tax return have already missed the deadline, which was 31 October 2025.
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