Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether her Department is taking steps to support self-employed people who require support to file their tax returns due to economic or health difficulties; and whether she has made a recent assessment of the potential merits of reforming the penalty system, in particular for those who do not owe any tax.

The government has reformed penalties and at Budget 2025 confirmed the introduction of a new penalty regime for late filing of SA returns and late payment of income tax that will now apply to all SA customers from April 2027. This reform of late filing penalties will reduce the penalties a customer can accumulate for filing late and will introduce a further safeguard so people will not receive a financial penalty for a single failure to file on time.

HMRC also has dedicated support in place for those facing personal difficulties and encourages anyone struggling to meet their obligations to make contact as soon as possible by phone or online.

This includes:

• HMRC’s Extra Support Team provides support to customers with their tax affairs if they have a health condition or their personal circumstances make it difficult for them to contact HMRC.
• Where customers are struggling to pay their tax on time, they may be able to set up a payment plan online or a Budget Payment Plan instead

The tax system contains obligations, set out in law, to ensure that HMRC can collect the correct tax to fund vital public services. HMRC is bound by law to apply penalties where customers do not meet these obligations. Penalties also help to reassure customers who comply with their obligations that HMRC are applying the rules fairly and consistently.

Under Self Assessment (SA), HMRC requires information from customers in their tax returns to determine whether they have any liability to income tax. Even where a customer has no tax to pay, the information provided within their SA return ensures that taxpayers receive the benefits to which they are entitled, such as Tax-Free Childcare.

Where HMRC charges a penalty, a customer can formally appeal. HMRC will cancel any penalties where they accept that a taxpayer had a reasonable excuse for not filing their return on time.