Overview

• Freedom of Information data shows HMRC levied 600,000 late-filing penalties on self-employed individuals with no income tax liability between 2018 and 2023.
• Under existing rules anyone earning more than £1,000 in self-employment must file an annual return by January 31 or incur an automatic £100 fine that can escalate to over £1,600.
• A points-based regime for Making Tax Digital participants removes the initial £100 charge and caps fines at £200 per return, but only applies to digital filers.
• Campaigners including the Low Income Tax Reform Group and Tax Policy Associates are urging HMRC to accelerate the digital rollout and tweak penalty rules to protect vulnerable low-income households.
• HMRC reports it has cancelled roughly one third of contested late-filing penalties over the past three years and offers a 30-day window for appeals based on reasonable excuses.