Self-employed individuals on lower incomes are considerably more prone to missing the self-assessment tax deadline compared to higher earners, according to data from HM Revenue and Customs (HMRC).
Key Findings from HMRC Data
In the 2023-24 tax year, approximately 5.9% of self-employed filers below the basic rate tax threshold submitted their returns after the January 31 deadline. This contrasts sharply with 3.1% of basic rate taxpayers, 2.7% of higher rate taxpayers, and 2.6% of additional rate taxpayers who were late, as calculated by PensionBee.
The retirement savings provider obtained the figures through a freedom of information (FOI) request to HMRC. Overall, around 180,000 self-employed filers missed the deadline in 2023-24, with about 94% of these being below basic or basic rate taxpayers.
Penalties and Challenges
Late filers typically face an initial £100 penalty, with additional charges possible. However, HMRC may waive penalties if a reasonable excuse is provided. PensionBee suggests that the findings indicate a knowledge gap among lower earners and broader structural issues.
Lower earners often have limited access to accountants or financial advisers and may be more vulnerable to income volatility, making fixed financial deadlines harder to meet. Additionally, PensionBee’s previous research highlights a lack of awareness that self-employed pension contributions can qualify for tax relief.
Expert Commentary
Lisa Picardo, chief business officer UK at PensionBee, commented: “Late filing of self-assessment tax returns is not evenly spread across the self-employed population. It is heavily concentrated among those on lower incomes, many of whom are part of what we describe as the ‘invisible workforce’.
“For many of these workers, unpredictable income and limited support make it genuinely harder to stay on top of financial administration and obligations, whether that is filing a tax return or saving into a personal pension. Missing the deadline is often a symptom of a wider pressure that the system does not adequately account for.”
HMRC Response
An HMRC spokesperson said: “We are focused on helping customers understand what they need to do and where to get support. Every year we run a national campaign to support self-assessment customers to file on time, while providing clear guidance on gov.uk and extra help from our expert advisers for those who need it. As a result, 11.5 million customers filed their 2024-25 tax return on time.”
