Is it necessary to submit a tax return if no taxes are due?
In the UK, it's essential for individuals who earn more than £1,000 from sources other than payrolled work to submit a self-assessment tax return. This includes income from rental properties, tips, commissions, foreign income, savings, investments, business partnerships, capital gains tax, and the high income child benefit charge.
Failure to submit a tax return on time can result in significant fines, even for those who owe no tax. The immediate penalty for late filing is £100, and if the return is more than three months late, an additional £10 per day penalty is charged, up to a maximum of £900. If the return is six months late, the penalty grows by a further £300, and after 12 months, an additional £300 is added to the fine. This means that a low-earner who owes nothing to the taxman could face fines totaling £1,600 after 12 months of non-filing, with interest added on top.
Over 600,000 people were fined at least £100 for being late to fill in their self-assessment tax returns between 2018 and 2023, despite owing no tax. 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."
However, there is a way for individuals to appeal against late filing penalties within 30 days of receiving a penalty notice. Appeals may be more successful if there are reasonable excuses or it is a first-time offence. HMRC can also waive penalties in some cases, but many low earners have been caught by this system despite owing no tax.
To avoid these fines, individuals are encouraged to register with HMRC and submit their tax returns on time. 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.
For those who no longer need to file tax returns, such as individuals who used to be self-employed but now work for a larger company, it is possible to close your self-assessment account and ask to be removed from self-assessment for a specific tax year by filling out an online form on gov.uk.
The government provides an online portal to help determine if you need to send a self-assessment tax return to HMRC. For those who require guidance on how to file their tax return, a step-by-step guide is available in our guide to how to file your tax return.
In summary, it's crucial for individuals to be aware of the self-assessment tax return requirements and deadlines to avoid costly fines. Even low earners who owe no tax can face substantial penalties for late filing.
- To manage one's personal-finance effectively and avoid potential fines, it's important for individuals who need to submit a self-assessment tax return in the UK to do so on time, as being late can lead to savings being significantly depleted by penalties.
- In the event of a late filing, individuals can appeal within 30 days if there are reasonable excuses or if it's a first-time offence, but many low earners who owe no tax have still faced penalties, highlighting the importance of timely submission in personal-finance management.
