Thousands of people get caught out by self-assessment filing rules each year.
This is because a lot of people don’t realise that under certain circumstances you still need to fill out a self-assessment tax return even if you do not owe the taxman any money.
Failing to file a self-assessment tax return on time can be an expensive mistake – there’s an initial £100 late penalty fine but charges can rise.
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Many people get caught out because they think they didn’t earn enough to come under the rules. But 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 current £12,570 income tax personal allowance, you are still required to fill out a tax return.
Hundreds of thousands of people have already fallen foul of the very strict rules and there are calls for the penalty to be relaxed to account for honest mistakes.
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, according to a freedom of information request from Tax Policy Associates, which found it is disproportionately low-earners who bear the brunt of the impact.
Under current rules, if you did not earn enough money to owe any tax but you still need to file a tax return and you are late doing so, 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, meaning the figure can soar much higher.
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”.
He echoed calls from the Low Incomes Tax Reform Group who called on HMRC to use its powers to waive penalties for people who miss the deadline for the first time.
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 £6 million per year.
“There would be a real benefit to some of the poorest and most vulnerable in society,” he added.
Those who believe that they have incorrectly received a penalty for filing their tax returns late are able to appeal to HMRC within 30 days of receiving the notice.
When do you have to fill out a tax return?
The key rule for when you have to fill out a tax return is the £1,000 limit. That is, 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 even if your total income is below the £12,570 tax-free personal allowance, you still have to file a tax return.
Other triggers that mean you will have to fill out a tax return is 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 to update HMRC about that.
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.
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.
When is the tax return deadline?
The deadline to file your tax return is 31 January if you plan to complete it online.
The deadline to fill out a paper tax return is 31 October 2025.
If you need to register for self-assessment, if you haven't filed one before but need to or did not need to send a tax return for the 2024/25 tax year, the deadline is 5 October 2026 for the 2025/26 tax year.
