This income level exempts people from income tax, yet over 180,000 low-income individuals were penalised despite having no tax to pay. Misunderstanding and an inability to pay the initial fine often resulted in further fines and accruing interest, creating financial burden for those already facing economic hardship.

For instance, Diana Cabral, a full-time employee, faced fines totalling over £2,000 for disregarding an initial £100 fine due to her understanding that her taxes were automatically deducted from her salary. Despite appeals, she was obliged to commit to a repayment plan of £20 per month, The Guardian reports.

Data disclosed by HMRC, obtained via freedom of information requests by the thinktank Tax Policy Associates (TPA), indicates an unequal distribution of penalties. Of the 11 million individuals required to submit a self-assessment tax return, 92,000 among the lowest earning 10% were fined for late submissions in 2020-21. In contrast, only 39,000 of the highest earning 10% faced fines in the same period.

From 2018-19 to 2021-22, TPA’s analysis revealed that over 660,000 fines were issued to low earners, although the data doesn’t necessarily imply an equal number of individuals were fined as some received penalties across multiple tax years. Approximately 180,000 successfully appealed their penalties.

Late submission penalties, which start at £100 and increase with time, used to be rescinded once the tax return was filed if there was no tax due. However, this changed in 2011. A spokesperson for HMRC responded: “The government has recognised that taxpayers who occasionally miss the filing deadline should not face financial penalties, and has already announced reform of the system.”