What Is a Nil Return and Do I Need to File One?

If you need to submit a tax return but haven't had any taxable income to declare, you may need to submit what's known as a nil return. It's the same tax return that anyone else would submit, just with no entries and no sections filled in.

Why Would HMRC Issue Me a Return If I Have Nothing to Declare?

HMRC has a set of criteria for deciding who they issue tax returns to, based largely on information they already hold from previous years. If your circumstances have changed (you stopped being self-employed or your income dropped significantly) and HMRC weren't made aware, they may still expect a return based on what they last knew about you. HMRC may also issue returns randomly.

Being issued a return doesn't mean you owe anything, or that HMRC is demanding anything from you beyond the return itself.

What Does a Nil Return Actually Contain?

A nil return contains your basic taxpayer information: your name, National Insurance number, Unique Taxpayer Reference, and the tax year in question. No figures, no additional pages.

It's worth noting that it's taxable income specifically that a self-assessment return deals with. Not all income is taxable, and not all income needs to appear on a return.

Do I Still Have to Submit It?

Yes. If HMRC has issued a return, you're required to submit one regardless of whether you have anything to declare. Clients sometimes assume that if they have nothing to report, they don't need to do anything, but that's not how it works.

Ignoring a return that HMRC has issued will trigger automatic penalties from the day it was due, and they continue to accrue the longer it goes without being submitted.

Can Submitting a Nil Return Help With Penalties?

Yes it can, in two ways. First, submitting stops any further penalties from building up. Second, the nil return itself can be useful if you're appealing penalties that have already been issued. If the reason you didn't submit on time relates to a lack of income or a change in circumstances, being able to point to a nil return as evidence of that position strengthens your case.

Whilst submitting a nil return won't automatically remove HMRC penalties, it gives you something concrete to work with when making an appeal.

If you're not sure whether you need to submit a return or what to do next, get in touch and we'll point you in the right direction. Contact us here.