HM Revenue and Customs (HMRC) has issued a significant clarification for state pensioners, confirming that two specific groups do not need to include certain income on their upcoming tax returns. This move comes as the deadline for Self Assessment for the 2024 to 2025 tax year approaches, with more than 12 million people expected to file.
Which Payments Are Excluded from Self Assessment?
The tax authority has stated that retirees do not need to declare the Winter Fuel Payment received from the Department for Work and Pensions (DWP). Similarly, those in Scotland who receive the Pension Age Winter Heating Payment are also exempt from including it on their returns.
This clarification is a welcome simplification for many pensioners who may have been uncertain about their obligations. However, HMRC stresses that this exemption applies only to these specific payments. Myrtle Lloyd, HMRC’s chief customer officer, encouraged people to get their affairs in order, stating: "New Year is a great time to start afresh. What better way than to ensure your tax affairs are in order for another year than completing your tax return."
Who Still Needs to File a Tax Return?
Despite this exemption for winter heating payments, many state pensioners may still have a legal requirement to submit a Self Assessment form. Key groups who must file include:
- Those who were self-employed as a ‘sole trader’ and earned more than £1,000 (before allowable expenses).
- Individuals who were a partner in a business partnership.
- Anyone who needs to pay Capital Gains Tax after selling an asset that increased in value.
- People with untaxed income, such as from property rental, tips, commission, savings, investments, dividends, or foreign income.
For those who do need to file, the winter fuel payments received in Autumn 2025 will instead be accounted for in the 2025 to 2026 tax return, which is due by 31 January 2027.
The Looming Deadline and Steep Penalties
The clock is ticking for the current tax year. While over 6.36 million taxpayers have already submitted their returns, nearly 5.65 million have yet to do so. The deadline is 31 January, and missing it triggers immediate financial penalties.
An initial £100 fixed penalty is charged for late filing, applicable even if no tax is owed or if the tax is paid on time. The penalties escalate sharply:
- After 3 months: Additional daily penalties of £10 per day, up to a maximum of £900.
- After 6 months: A further penalty of 5% of the tax due or £300, whichever is greater.
- After 12 months: Another 5% or £300 charge, whichever is greater.
Separate penalties for late payment of any tax owed are also applied at 30 days, 6 months, and 12 months, each at 5% of the outstanding amount. Interest is charged on all overdue tax.
HMRC data reveals popular filing times, with 34,264 customers submitting on New Year's Eve and 19,789 on New Year's Day. The most active hour was between 11:00 and 11:59 on 31 December, when 3,927 returns were filed.
Taxpayers are urged to act now to avoid unnecessary fines. The message from HMRC is clear: "If you have yet to start, the clock is ticking, go to GOV.UK and start today."
