You may need to do a tax return if you earn under £10000 or below the personal allowance and have no tax to pay. But there are some exceptions.
Read this guide to find out whether you need to do a tax return even if you have a low income and don’t owe any tax. You’ll also learn the steps you need to take if you do have to fill in a return to help you keep on the right side of HMRC.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional.
Do You Need to Do a Tax Return If You Earn Under £10,000?
Whether you need to fill in a tax return depends on your circumstances and how you have earned your income. Here are some common scenarios:
You Earn Under £10000 from Self Employment, a Side Hustle or Freelancing
In most cases, this type of income is taxable and is paid to you without any tax deducted from it (unlike if you work for someone and they give you a payslip with all the deductions made for you). It’s your responsibility to tell HMRC you are receiving taxable income regardless of the amount or whether you made a profit.
The only exception is if you want to take advantage of the trading income allowance. This entitles UK individuals to earn up to £1000 in income (not profit) without telling HMRC about it and doing a tax return.
Once your income goes over £1,000 you’ll need to register as self-employed and do a tax return, declaring your income in the self-employment section of the form. You can read more about taxes, registration and how self-assessment works in this guide to going self-employed.
You Earn Under £10000 as a Landlord
If you are collecting rent under £10000 as a landlord then you’ll need to let HMRC know about your income and pay tax if applicable.
UK individuals are entitled to earn up to £1,000 rental income tax-free each tax year by claiming the property income allowance. That means they don’t need to tell HMRC about their income or register as a landlord.
Once your rental income exceeds £1,000, you’ll need to register as a landlord and pay tax. Read this guide to find out more about tax on rental income.
Do You Need to Do a Tax Return If You Earn Tax-Free Income?
Certain types of income that are tax-free, meaning if you earn them or earn less than their individual thresholds during one complete tax year you don’t need to do a tax return. Types of tax-free income include:
- Your first £2,000 of dividend income (dividend allowance)
- Your first £1,000 of interest on savings
- Premium bonds or lottery winnings
- Income from a lodger under £7,500 (rent-a-room scheme)
- Children tax credits
- Maternity allowance
- Universal credit
- Winter fuel payments
- Disability Living Allowance
If you are not registered to do a tax return, then depending on which type you earn, you may not need to do a tax return. But if you are already registered for self-assessment, then you may need to include some of these types of income on your tax return, even though you have no tax to pay. You’ll need to check what you need to do depending on the type of income you’ve received. Read this guide to find out more about different types of taxable income.
How To Let HMRC Know You Need to Do a Tax Return
If you need to do a tax return, you’ll need to register for self-assessment. HMRC won’t tell you that you need to do one, it’s your responsibility to let them know you are receiving income you need to tell them about. Follow this guide to find out how to register for self-assessment.