THOUSANDS of low income workers have been fined by HMRC and thousands more may be at risk.

HM Revenue and Customs has handed out penalties to more than 184,000 workers earning less than £12,570 a year.

Despite being below the threshold for paying income tax, they received a penalty from HMRC of at least £100,

Some people who have additional income must file a tax return – even if they owe no tax.

According to a report by Tax Policy Associates 40% of all late filing penalty charges from 2018 to 2022 fell into the low income category.

Dan Neidle, a tax campaigner and founder of Tax Policy Associates said: "We believe the law and HMRC practice should change.

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"Nobody filing late should be required to pay a penalty that exceeds the tax they owe."

The figures obtained by Tax Policy Assocates show that in 2020/21 there were 184,000 penalties issued to those in the low income bracket.

The trend is the same for 2018/2019 and 2021/22 (although the 2021/22 data is incomplete as taxpayers are still filing).

Penalties can add up to thousands of pounds and some people are falling into debt and in one case someone even became homeless because of HMRC debt.

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Most people in the UK aren't required to submit a tax return as their income comes from their employer and will have already been deducted from their wages.

But for those that do, tax returns must be filed online by January 31, or three months earlier (31 October) for people submitting paper forms.


If a tax return is submitted even a day late an automatic late filing penalty of £100 is applied.

And three months after the deadline is when the penalties can really start piling up, and can increase by £10 each day for a maximum of 90 days (£900).

After six months an additional penalty of £300 can be applied and after twelve months another £300 can be added, making the total penalty charge £1,600.

Up until 2011 if there was no tax to pay and a penalty was charged for late filing, it was cancelled.

But under the new rules, the fine now remains even if the "taxpayer" has no taxable income or tax liability.


Penalties can be appealed either using a form or online service and if HMRC agree there is a "reasonable excuse for not paying, the penalty will be cancelled.

But not everyone has found dealing with HMRC and understanding the process so straightforward.

One person claims their mother was fined despite having no tax to pay, and providing evidence that she'd had two unplanned operations which resulted in her late filing.

And another person describes how her mum, who was a low wage employee was pulled into the "self assessment regime" after needing to claim her fuel expenses as a community care worker.

She now owes HMRC around £5,000 in penalty charges.

While another person describes how they were fined £100 for the late return, but did not reply due to suffering with mental health and has now racked up £1000 in penalty charges.

Bradley Post, MD of Rift said: "It’s disappointing to see that HMRC has devoted such time and energy in penalising those at the very bottom of the ladder.

"At the same time, those seeking advice and guidance from HMRC are subject to long delays and inadequate communication channels.

"It's fair to say that the resources used to pursue the hardworking individuals who don’t owe any tax to begin with could be far better used in addressing their own operational inefficiencies."

An HMRC spokesman said: "The Government has recognised that taxpayers who occasionally miss the filing deadline should not face financial penalties, and has already announced reform of the system.

 “Deadlines for returns are necessary for the efficient functioning of the tax system though, and we strongly encourage anyone who does not need to file a return to tell HMRC."

How to do a self-assessment

Open an online account

If you haven't yet registered for an account, you should do so straight away as this can take some time.

To register for self-assessment, visit the GOV.UK website and complete the identification process.

You'll then be sent an activation code in the post, which can take 10 days in the UK, or 21 days if you're abroad.

Once the code arrives, you need to activate the account within 28 days, otherwise it will expire and you'll need to request another one.

Gather all the information and documents you need

Once you've registered, you'll need to collect all the documents and information you need to be able to complete the tax return.

This includes your 10-digit Unique Taxpayer Reference (UTR) and your National Insurance number.

If you can't find your UTR, you can request a new one from HMRC.

The form also includes include bank statements and details of untaxed income from the year, which might involve finding your P60 (if you earned more than £8,500), your P11D (which has information about expenses and benefits), and payslips.

If you're self-employed, you'll need records of your income and receipts for expenses.

You will also need interest statements from banks and building societies, and details of pension contributions made.

If you need third parties to provide you with statements and documents, you should contact them right away as this can take time.

Fill in the form

Once you log in to complete your online tax return, you should begin by checking your personal details.

You should then choose to fill in the sections that fit your circumstances.

With an online tax return, HMRC’s system will react to the answers you give as you put them in.

This might mean, for example, that sections that are not relevant to you are removed.

When filling in the figures, the online system gives reminders about where you can find the information to fill in particular sections.

As a self-assessment taxpayer you need to report everything you’ve earned over the tax year from April 6, 2021 to April 5, 2022.

This includes income from employment, self-employment, income from property, and interest and gains on your savings and investments.

Remember to also claim all the deductions you are entitled to, including gift aid on your charitable contributions and membership costs for zoos and museums.

If you are a member of a professional body that is required for your employment, you can include the cost of the subscription as a deduction.

Those who are self-employed can also claim back the running costs of a car, but not the cost of buying one.

Your tax will be calculated automatically as your fill in the return.

Take your time and double-check your return

Once you've filled in the empty fields, check all your numbers thoroughly before pressing submit.

When filing online, you can save your tax return at any time, so if you need to go away and double check your figures, do so.

When you are happy that everything is correct, you can press send.

If you need to change your tax return after you've filed it, you can do so within 12 months of the original deadline or you can write to HMRC for any changes after that.

If you need help

If you need help with your return, visit the GOV.UK website or call the helpline on 0300 200 3310.

There are HMRC guidance notes and manuals online, but if you're struggling you could seek advice from an accountant or tax adviser.

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Consumer group Which? also offers an online self-assessment tool that does the calculations for a tax return and submits it directly to HMRC.

You have to fork out £10 for the service though, or £36 if you're not a member.

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