Do you still have to file a tax return if you don’t owe any tax?

Over 600,000 people were issued fines of at least £100 for being late to fill in their self-assessment tax returns despite owing £0 in tax between 2018 and 2023.

Even if you do not owe anything to HMRC, people who earn more than £1,000 in income from something other than payrolled work still have to fill out a self-assessment tax return and provide details to the taxman.

This means that even if your total income falls under the £12,570 income tax personal allowance, you are still required to fill out a tax return.

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This quirk of the tax system has disproportionately caught out hundreds of thousands of low-earners, a freedom of information request from Tax Policy Associates found.

Under current rules, being late to fill out your self-assessment tax return will mean you are 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) 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.

This means that a low-earner who owes nothing to the taxman could be fined £1,600 after 12 months of not acting on the late tax return, with interest 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.”

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 £6m per year.10 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?

If you are self-employed and have an income of £1,000 or more, you are required to fill out a self-assessment tax return, even if your total income is below the £12,570 tax-free personal allowance.

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.

You also have to fill out a self-assessment tax return if you were a partner in a business partnership, you had to pay capital gains tax, or you had to pay the high income child benefit charge.

If you are unsure of 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 now work for a larger 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 and 31 October if you're submitting a paper return. You need to have registered with HMRC by 5 October for paper returns.