HMRC Says You No Longer Need a Tax Return? Why You May Still Need to File

A letter from HMRC saying you no longer need to send a tax return does not mean you will never need to file again. It means HMRC does not expect a return from you based on what it knew last time. The legal duty to check your position every tax year, and to register again if something changes, stays with you.

Over the past few months, many employees taxed through PAYE have received letters telling them that their 2025/26 return is the last one HMRC needs, or that they have been removed from Self Assessment altogether. For people whose only income is a salary, that is genuinely good news. For anyone with a side hustle, shares, a foreign bank account or investments abroad, it can be a trap.

This guide explains what the letter really means, why HMRC is sending it, and the common situations where you still need to register and file, even if your income is below £100,000.

What does the HMRC letter actually mean?

The letter means HMRC will stop issuing you a notice to file. HMRC reviews your most recent return, decides your affairs now look simple enough to be dealt with through your tax code, and takes you out of Self Assessment.

It does not mean:

• you have no tax to pay on income outside your salary
• your circumstances will stay the same next year
• HMRC has checked your foreign income, share sales or side income
• you are excused from filing a return HMRC has already asked for

On that last point, HMRC is clear that if it has written asking you to send a return for a tax year, you must send it by the deadline on the letter. If your letter says 2025/26 is your final return, that return is still due by 31 January 2027.

Keep the letter with your tax records. It is useful evidence of what HMRC told you, but it is not a permanent exemption.

Why is HMRC removing people from Self Assessment?

HMRC is removing people because the income threshold that used to pull high earning employees into Self Assessment no longer exists. Since 2024/25, a salary alone, however large, is not a reason to file.

• Up to 2022/23: a return was required if income was over £100,000
• 2023/24: the threshold was raised to £150,000
• 2024/25 onwards: the threshold was removed, so PAYE income alone is no longer a reason to file

This is where a common misunderstanding comes from. Many people believe that if their income is under £100,000 they never need to file. The £100,000 figure was only ever one of several tests, and it has now gone completely. What decides whether you need to file is the type of income you have, not how much you earn from your job.

One knock on effect is worth knowing. If your income is above £100,000, you still lose £1 of personal allowance for every £2 over that level. Without a tax return, the only thing collecting that tax is your tax code, so it is worth checking your code in your HMRC app or personal tax account each year.

It is your responsibility to review every tax year

UK tax works on self assessment in the literal sense: you are expected to assess your own position each year. HMRC will not write to you when your circumstances change, because in most cases it does not know they have changed.

If you need a return for a tax year and either have never filed before, or were registered but did not need to file for the previous year, you must tell HMRC by 5 October after the end of that tax year. In practice:

• 2025/26 tax year (6 April 2025 to 5 April 2026): the registration deadline was 5 October 2026. If you missed it, register now; the filing and payment deadline is 31 January 2027.
• 2026/27 tax year (6 April 2026 to 5 April 2027): register by 5 October 2027 if anything below applies.

We recommend a simple habit. Each April, once the tax year ends, run through the checklist in this article before deciding you have nothing to report.

When you may still need to file a tax return

You may still need to file if you have any income or gains that your employer’s payroll does not deal with. These are the situations we see most often among our clients, many of whom work for listed companies and assumed PAYE had everything covered.

Side hustle and self employed income

If you earn more than £1,000 from self employment in a tax year, measured before expenses, you must register and file. This covers freelancing, consulting, tutoring, content creation, reselling goods online and similar work alongside your job.

Online platforms such as marketplaces, rental sites and gig apps now report seller income directly to HMRC under the digital platform reporting rules, so HMRC increasingly knows about this income even when the taxpayer has not declared it. If your qualifying self employed and property income is above £50,000, Making Tax Digital for Income Tax also applies from April 2026.

Capital Gains Tax on shares, crypto and property

You need to report if you have Capital Gains Tax to pay. For 2025/26 the annual exempt amount is just £3,000, and gains above it are taxed at 18% or 24%. Common triggers include selling RSU or ESPP shares that have grown since vesting, selling crypto, and disposing of investments held outside an ISA.

If you are registered for Self Assessment, you must also report disposals where the total sale proceeds exceed £50,000, even if no tax is due. Sales of UK residential property with tax to pay have their own 60 day reporting deadline through HMRC’s property service.

Our guide to RSU taxes and Self Assessment explains why broker statements often give the wrong UK figures.

Capital loss claims

A capital loss is only useful if you claim it, and HMRC will not do this for you. You have a limited time from the end of the tax year in which you made the disposal. If you have losses on shares sold, either yourself or automated sell to cover sales, must be claimed or they are lost for good.

You can claim a loss on your tax return. However, HMRC will not do this for you. It is a good practice especially for individuals with RSU income to assess transactions and maintain the loss pool. Registered losses can then be set against future gains, which is especially valuable for anyone who holds employer shares long term.

Foreign dividends

UK residents are taxed on worldwide income, and dividends from US or other overseas shares are a frequent blind spot. HMRC’s guidance says you do not need a return only if all of these apply:

• your only foreign income is dividends
• your total dividends, UK and foreign combined, are below the £500 dividend allowance
• you have no other income to report

Above that, the dividends belong on the foreign pages of your return. Reporting them correctly also lets you claim Foreign Tax Credit Relief for tax already withheld abroad, such as US withholding tax.

Foreign interest

Interest from an overseas bank account, a foreign deposit or cash held at an overseas broker is taxable in the UK. UK banks report interest to HMRC so it can adjust your tax code, but foreign banks do not do this through PAYE, so the tax is not collected automatically. HMRC’s general position is that UK residents with foreign income usually need to file.

HMRC does receive overseas account information through international exchange agreements, and penalties for undeclared offshore income are higher than for UK income.

UK savings and dividends

If your income from savings and investments is over £10,000, you need to file. Below that, UK dividends over the £500 allowance are not reported to HMRC by anyone else, so you must tell HMRC, either through a return or through your personal tax account so the tax can be collected through your code.

Rental and other untaxed income

Property income over the £1,000 property allowance, rent under the Rent a Room scheme above £7,500, tips, commission and other untaxed income usually need reporting. Where untaxed income is above £2,500, a return is normally required.

High Income Child Benefit Charge

If you or your partner receives Child Benefit and the higher earner’s adjusted net income is over £60,000, the charge applies, rising to the full amount of Child Benefit at £80,000. Employees can now pay it through their tax code instead, but if you do not arrange that, you must register and file.

Claiming tax relief you are owed

Some reasons to file are in your favour. Higher and additional rate taxpayers who pay into a personal pension or SIPP, or make Gift Aid donations, only receive their extra relief if they claim it. Leaving Self Assessment can mean quietly losing that relief unless you claim it another way.

Quick checklist: do you need to register again?

If any situation below applies to the tax year just ended, you are likely to need a return, whatever HMRC’s letter said.

• Side hustle or freelance work
  • Trigger: gross income over £1,000
  • Action: register and file
• Sold shares, RSUs, ESPP shares or crypto
  • Trigger: gains over £3,000, or proceeds over £50,000 if registered
  • Action: report the gain or disposal
• Sold investments at a loss
  • Trigger: any loss you want to use against future gains
  • Action: claim losses at the end of the tax year to update loss pool
• Foreign dividends
  • Trigger: total dividends over £500, or any other income to report (US broker accounts pay dividends in USD)
  • Action: report on the foreign pages
• Foreign interest
  • Trigger: any taxable overseas interest (US broker accounts pay interest in USD)
  • Action: usually report on the foreign pages
• UK savings and investment income
  • Trigger: over £10,000
  • Action: register and file
• Rental income
  • Trigger: over £1,000, or over £7,500 under Rent a Room
  • Action: usually register and file
• Child Benefit in the household
  • Trigger: adjusted net income over £60,000
  • Action: pay through your tax code or file
• Pension or Gift Aid relief at higher rates
  • Trigger: relief not yet claimed
  • Action: file or claim through HMRC

How to register again, and what happens if you do not

Registering again is straightforward if you have been in Self Assessment before. You keep your existing Unique Taxpayer Reference (UTR), and you reactivate your record through your HMRC online account or form SA1 if you are not self employed. If you have started self employed work, register as self employed instead so your National Insurance is set up correctly.

If you miss the deadlines, the costs add up quickly:

• Failure to notify: a penalty based on the tax you owe, which can reach 30% for careless mistakes and 100% where income is deliberately concealed, with higher rates for offshore income
• Late filing: an automatic £100 penalty once the return is late, with further daily and percentage penalties after three, six and twelve months
• Late payment: interest from 31 January, plus late payment penalties on tax still unpaid

The sooner you act, the better. Where you register late but your return is filed and the tax is paid by 31 January, the exposure is usually much smaller than if HMRC finds the income first.

Appoint TaxQube to review your position every year

As a regulated firm of specialist tax accountants supervised by ACCA, we help employees of listed companies, high earners and investors stay compliant after HMRC removes them from Self Assessment. Every year we review whether you need to file, keep your RSU and share pools up to date, and deal with foreign income, capital losses and side income before deadlines arrive.

We work proactively. Rather than waiting for 31 January, we start collecting information as soon as the tax year ends, so registration deadlines such as 5 October are never missed.

Unlike some firms, we do not take a share of your tax savings; you keep 100% of them. We charge an all inclusive monthly retainer with no additional invoices, giving you year round access to qualified tax advisers.

If HMRC has written to say you no longer need a tax return and you are not sure that is right for you, contact us for a free initial consultation.

Frequently asked questions

HMRC says I no longer need to file a tax return. Do I still need to tell them about other income?

Yes. The letter only means HMRC will stop sending you a notice to file. If you later have untaxed income or taxable gains, you must register again by 5 October after the end of that tax year.

My income is under £100,000. Do I need to file a Self Assessment tax return?

Possibly. The £100,000 threshold no longer decides anything on its own. Side income over £1,000, taxable gains, foreign dividends above the allowance, foreign interest or the High Income Child Benefit Charge can all require a return at any income level.

I earn over £100,000 but only from my salary. Do I need to file?

Not usually. From 2024/25 onwards, income taxed only through PAYE is not a reason to file, however high it is. Check that your tax code reflects the reduced personal allowance, as nothing else will correct it.

Can I claim a capital loss if I am not registered for Self Assessment?

Yes. If you have never made a gain and are not registered, you can write to HMRC to claim the loss. Otherwise claim it on your tax return. Either way, the deadline is four years from the end of the tax year of the disposal.

Do I need to declare foreign dividends from US shares?

Usually, yes. You only avoid a return if foreign dividends are your only foreign income, your total UK and foreign dividends are under £500, and you have nothing else to report.

Do I need to report interest from a foreign bank account?

In most cases, yes. Foreign interest is taxable in the UK and is not collected through your tax code automatically, so it normally needs to be reported on a return.

How much can I earn from a side hustle before telling HMRC?

Up to £1,000 of gross self employed income a year is covered by the trading allowance. Above that, you must register and file, even if your expenses mean there is little profit.

What if I missed the 5 October registration deadline?

Register as soon as possible. For 2025/26, file and pay by 31 January 2027. Acting before HMRC contacts you usually keeps penalties to a minimum.

Can HMRC find out about income I have not declared?

Increasingly, yes. HMRC receives data from UK banks, online selling platforms, and overseas tax authorities about foreign accounts. It is far better to put things right voluntarily.

This article is general guidance based on HMRC rules for the 2025/26 and 2026/27 tax years and is not advice for your specific circumstances. Please speak to a qualified adviser before acting.

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We help taxpayers in the UK to ensure compliance with HMRC – It is a legal responsibility. If you need help in submitting your Tax reports or accounts preparation, please do feel free to get in touch with us by completing the contact us form.

This article is general guidance based on HMRC rules for the 2025/26 and 2026/27 tax years and is not advice for your specific circumstances. Please speak to a qualified adviser before acting.