Usually, yes. This is the single most common misunderstanding we see, and it's an expensive one: whether you have to file has almost nothing to do with whether you owe anything. It depends on whether you meet HMRC's criteria, and whether they've asked you for a return. Miss the deadline on a nil bill and you'll still be £100 down.
Why the tax bill and the tax return are two different things
A tax return is how HMRC works out what you owe. The answer can perfectly well be nothing. Your allowances might cover everything, you might have made a loss, or the tax might already have come off at source.
None of that removes the obligation to tell them. The return is the calculation, not the bill, and the penalties for not filing are separate from any penalty for not paying.
Who does HMRC expect a return from?
You need to file for a tax year if any of these applied:
- You were self-employed as a sole trader and earned more than £1,000 before taking expenses off.
- You were a partner in a business partnership.
- You had Capital Gains Tax to pay, for example on a second property or on shares.
- You had to pay the High Income Child Benefit Charge and don't pay it through your tax code.
- You're an off-payroll worker repaying a student or postgraduate loan.
You may also need one if you had untaxed income: rent from property or land, tips and commission, savings interest, dividends, foreign income, or UK income while living abroad. Non-resident landlords in particular are caught, and it's an area we deal with constantly.
That £1,000 figure is the trading allowance. Turn over less than that from a side business in a tax year and you generally don't have to report it. Go over, even by a little, even if the business lost money, and a return is due.
What if HMRC has sent me a notice to file?
Then you have to file, full stop, regardless of your circumstances. A notice to file creates the obligation on its own. Ignoring one because "there's nothing to declare" is what turns a five-minute job into a penalty.
If the notice genuinely shouldn't have been issued, you can ask HMRC to withdraw it, but you need to do that rather than assume. Until it's withdrawn, the deadline stands.
What does it cost to miss the deadline?
The late filing penalties apply whether or not you owe any tax:
| How late | Penalty |
|---|---|
| Straight away | £100 |
| Over 3 months | £10 a day, up to £900 |
| Over 6 months | 5% of the tax due or £300, whichever is greater |
| Over 12 months | Another 5% or £300, whichever is greater |
On a nil bill the 6 and 12 month charges fall back on the £300 minimum, so a return you never filed because you owed nothing can still cost £1,600. Paying late is charged separately, at 5% of the unpaid tax at 30 days, 6 months and 12 months, plus interest.
The deadlines for the 2025 to 2026 tax year: tell HMRC you need to file by 5 October 2026 if you're new to it, paper returns in by 31 October 2026, online returns and payment by 31 January 2027.
Why filing can be worth it even when you don't have to
A few reasons we'd often suggest filing anyway:
- Losses. A loss only counts towards future profits if it's reported. File the loss now, use it later.
- Proof of income. Mortgage lenders and letting agents ask for tax calculations. If nothing's been filed, there's nothing to show them.
- Refunds. If tax came off at source, through the Construction Industry Scheme for example, a return is how you get the overpayment back.
- Tax-Free Childcare and similar schemes often want evidence that you're genuinely self-employed.
How do I stop being in Self Assessment?
Tell HMRC that your circumstances have changed and ask them to take you out of it. They won't work it out on their own. Until they confirm, returns keep being issued and penalties keep applying to the ones you don't send.
There's a checker on GOV.UK that tells you whether a return is needed for a given year, which is the sensible starting point if you're unsure. We usually do that check and the conversation with HMRC in one go for clients who've stopped trading.