Self assessment late filing penalties hit lowest earners

From 2018 to 2022 HMRC issued 420 000 penalties for late filed self-assessment tax returns to individuals with incomes too low to owe any tax according to a report from Tax Policy Associates (TPA).

The independent thinktank’s research showed that 40% of all late filing penalties charged by HMRC over these four years fell into this category.

Until 2011 late filing penalties were cancelled when there was no tax liability. However the law was changed so that the penalty remains even when the taxpayer has no taxable income.

As well as questioning why so many individuals who do not have to pay tax are asked to complete a tax return the TPA recommends that the law should be changed so that late filing penalties are automatically cancelled if HMRC later determines that a taxpayer has no taxable income. Similarly there should be...