I have no income: do I still need to file a tax return?

Residence & Domicile Aug 15, 2017

Quite often people assume that, because they make no money, or because they don't make enough to pay tax, they don't need to make a Self-Assessment tax return. Unfortunately, that is not the case and failing to do a tax return when you have to exposes you to serious penalties. While for most employees, there is no need to file a tax return since tax is taken at source through the PAYE system, they are many instances where you will have to do a tax return, even if failing to do so does not impact the HMRC coffers.

Obviously, one can understand that if you have additional income that generates additional tax, you will in most instances be required to file a tax return. There are instances however where, even if there is no additional tax due, you will have to file a tax return anyhow. Here are a few examples:

  1. You are a director of a Limited Company. Even if the company has not distributed any dividends, you are required to file a tax return every year.
  2. Your salary is greater than £100,000. You also need to file a tax return, even if tax has been taken at source through PAYE already.
  3. You are non-domiciled in the UK and wish to claim the remittance basis of taxation.
  4. You have net property income of more than £2,500 or gross property income before expenses of more than £10,000.
  5. You are self-employed and have started trading. Even if you still don't make a profit, you will be required to file a tax return.
  6. You have claimed child benefit and either you or your partner earned more than 50,000 in the tax year.
  7. You made a capital gain below the tax-free allowance, but the chargeable assets were worth more than 4 times the allowance (i.e. £45,200).

In any doubt, you can check the HMRC web site but in any case, don't assume anything as it can turn out to be a costly assumption... Also keep in mind, that even if you conclude that don't need to file a tax return and if HMRC decides otherwise (e.g. you have received a notice to file), you should comply!


Franck Sidon

With over 15 years of experience as a Managing Director at TaxAssist Accountants, I have helped thousands of businesses and individuals achieve their financial goals and optimize their tax efficiency.