A Reddit post recently captured a panic that lands in plenty of inboxes every autumn: a medical student who’d been doing casual tutoring since 2022, just heard about Self Assessment for the first time, registered — and then discovered online that there are penalties for registering late. They’d worked out a figure of £4,800 and wrote that it would “eat away a quarter of everything I’ve earned (which is already spent on rent).”
Here’s the short version of what they — and most of the internet calculators they likely used — got wrong: that’s not the penalty regime that applies to them. And in their specific case, the real number is almost certainly £0.
This article explains why, so you can stop spiralling and take the one action that actually matters: file the returns HMRC sends you, on time.
The Two Penalty Regimes — and Why Only One Applies to You
This is the bit that confuses everyone, including some of the replies on that thread. There are two completely separate penalty systems, and which one applies depends on whether HMRC knew you existed.
Regime 1: Late filing (the flat £100 + £10/day system)
This is the one most people have heard of, and the one our late filing penalties guide covers in full. It works like this:
- £100 the day after the filing deadline
- £10 per day after 3 months (up to £900)
- £300 or 5% of tax due at 6 months
- £300 or 5% of tax due at 12 months
Stack those up across three late years and you get roughly £4,800 — which is almost certainly where the Reddit poster’s figure came from.
But this regime only applies when HMRC has issued you a notice to file a return and you miss the deadline on that notice. It’s triggered by ignoring a return you were asked to submit, not by failing to tell HMRC you existed in the first place. If HMRC didn’t know about your tutoring income, they never sent you a notice, so these flat penalties don’t automatically apply for the years before you registered.
This is set out in HMRC’s Self Assessment penalties guidance and the underlying legislation (TMA 1970). The flat £100 is a penalty for not filing a return you were required to file — not a penalty for not registering.
Regime 2: Failure to notify (the tax-geared system)
This is the one that does apply when you register late. It’s a different law entirely — Schedule 41 of the Finance Act 2008 — and it works on a completely different principle.
Instead of a flat fine, the penalty is a percentage of the “Potential Lost Revenue” — the tax HMRC lost because you didn’t tell them you owed it. The HMRC Compliance Handbook CH70100 puts it plainly: “The amount of the penalty is a percentage of the tax… that is unpaid.”
The percentage depends on behaviour and whether you came forward voluntarily:
| Behaviour | Unprompted max | Unprompted min (within 12 months) |
|---|---|---|
| Non-deliberate (careless or innocent) | 30% | 0% |
| Deliberate but not concealed | 70% | 20% |
| Deliberate and concealed | 100% | 30% |
The crucial detail: for a non-deliberate failure where you come forward unprompted (i.e. you register before HMRC catches you) and HMRC becomes aware within 12 months of the tax becoming unpaid, the penalty can be reduced to 0%. That’s not a loophole — it’s the published reduction for quality of disclosure, set out in CH73200.
And there’s a more fundamental point that matters even more for low earners.
If You Owed No Tax, There Is No Penalty
The Low Incomes Tax Reform Group states the rule cleanly:
“If you meet HMRC’s Self Assessment criteria, but do not owe any tax, then you do not have the same legal duty to notify by 5 October and HMRC cannot charge you a failure to notify penalty if you register late.”
This follows directly from the legislation. “Potential Lost Revenue” is defined as the tax that went unpaid because of your failure to notify. No unpaid tax = no potential lost revenue = nothing for a percentage to apply to. The penalty is mathematically £0 before any reduction for disclosure.
The math that makes most side-hustlers owe nothing
If you earn income from a gig platform (Deliveroo, Uber, Just Eat), the same rules apply — see our gig economy tax guide for when platform income needs to be declared.
Two allowances stack to wipe out the tax on small earnings:
- The £1,000 trading allowance — deducted from your gross self-employment income (before expenses). If you earn £5,000 tutoring, £1,000 of it is tax-free automatically.
- The £12,570 personal allowance — the amount of total income (from all sources) you can earn before paying any income tax.
For the Reddit poster’s tutoring income, applying both:
| Tax year | Gross income | − £1,000 trading allowance | Taxable profit | Tax due (under £12,570 PA) |
|---|---|---|---|---|
| 2022/23 | £1,400 | £400 | £400 | £0 |
| 2023/24 | £4,000 | £3,000 | £3,000 | £0 |
| 2024/25 | £5,000 | £4,000 | £4,000 | £0 |
| 2025/26 | £11,000 | £10,000 | £10,000 | £0 |
Every year sits below the personal allowance. No tax due → no potential lost revenue → no failure to notify penalty. No tax due → no late payment interest, no late payment surcharges. The £4,800 figure isn’t just wrong — it’s based on a regime that doesn’t apply, applied to tax that was never owed.
For the full breakdown of how the trading allowance works (and when it’s better to claim actual expenses instead), see our trading allowance vs expenses guide.
When this stops being £0
The same logic applies to anyone, not just the poster, but the outcome flips once you cross the personal allowance. If your side income (after the £1,000 allowance) plus any other income pushes you over £12,570, tax starts to be due — and that is the figure a failure to notify penalty would be a percentage of. The rule is the same; the number just isn’t zero anymore.
“But Ignorance Isn’t an Excuse”
This came up in the thread, and it’s worth addressing because it’s a genuine source of fear. The Reddit poster assumed that because ignorance isn’t a reasonable excuse, they couldn’t appeal and were stuck with the penalty.
Two things to untangle:
First, “reasonable excuse” is an appeal concept — and there’s nothing to appeal when the penalty is £0. If you owed no tax, no penalty is issued, so the question of excuse never arises. You don’t need a defence against a charge that doesn’t exist.
Second, even where tax is owed, ignorance of the deadline isn’t the thing that determines the penalty size. HMRC’s list of reasonable excuses doesn’t include “I didn’t know I had to register” — that’s correct. But the failure to notify penalty is primarily driven by the unpaid tax and the disclosure quality, not by the reason you were late. Coming forward unprompted, before HMRC finds you, is what unlocks the reduction to 0% for a non-deliberate failure within 12 months. The reason you were late matters far less than the fact that you’re the one telling them now.
If you ever do receive a penalty you believe is unfair — for late filing, late payment, or failure to notify — the appeal process is the same, and our how to appeal an HMRC penalty guide walks through it step by step.
What Actually Happens When You Register Late
So you’ve registered, you’re waiting for the UTR, and you’re worried about what comes next. Here’s the realistic sequence:
- HMRC processes your registration and issues your UTR (Unique Taxpayer Reference). This can take up to 10 working days by post — see our lost UTR guide if it doesn’t arrive.
- HMRC may issue notices to file for the back years they believe you should have reported. You’ll typically get 3 months from the date of the notice to file each return, not the usual 31 January deadline.
- You file the returns. For each year, you declare your self-employment income, claim the £1,000 trading allowance (or actual expenses if higher), and the system calculates the tax. If you’re below the personal allowance, the return shows £0 tax due.
- If no tax is due, no failure to notify penalty is charged. No interest, no surcharges. You’re done.
- If tax is due, HMRC calculates any failure to notify penalty as a percentage of the unpaid amount, reduced for your unprompted disclosure. You’ll receive a determination showing the figure.
The critical action throughout: file each return by the deadline on its notice. Once HMRC has issued a notice, the flat late-filing regime does kick in if you miss that new deadline — and that’s the one that produces the scary £100-plus-daily-charges numbers. So the window between “HMRC sends the notice” and “you file” is where you need to be prompt. See our missed Self Assessment deadline guide for what happens if you slip that deadline.
The One Mistake That Actually Creates Risk
The Reddit poster’s real danger isn’t the £4,800 — it’s the possibility that the fear of £4,800 stops them filing at all. Here’s why that’s the only move that genuinely makes things worse:
- Not registering leaves the failure to notify open-ended. If HMRC later finds you (via bank reporting, a client declaring payments, or data matching), the disclosure becomes prompted, not unprompted — and the minimum penalty for a non-deliberate prompted disclosure is 10–20%, not 0%.
- Registering but not filing the back-year returns once notices arrive converts a £0 situation into a flat late-filing penalty situation. The £100 + £10/day regime now genuinely applies, because you’ve been given a deadline and missed it.
- Registering and filing on time — even if years late to register — most often costs nothing for a sub-personal-allowance earner, and costs a reduced percentage (potentially 0%) for anyone else who came forward unprompted.
In other words: the penalty regime rewards coming forward, and punishes staying hidden. The scary internet figure describes the punishment for staying hidden and being caught — which is not the situation the poster is in.
The Bottom Line
- The £4,800 figure is from the wrong regime. Flat late-filing penalties apply when you miss a notice to file. If you were never registered, no notice was issued, so those penalties don’t automatically apply for the pre-registration years.
- The correct regime is “failure to notify” — a percentage of the tax that went unpaid. No unpaid tax means no penalty, full stop.
- If your side income was below the personal allowance (after the £1,000 trading allowance), you owed £0 each year, so the penalty is £0 — regardless of how late you registered or why.
- Ignorance isn’t a reasonable excuse, but it’s irrelevant when no penalty is due. And where tax is owed, coming forward unprompted is what reduces the penalty — not the reason you were late.
- File the back-year returns on time once HMRC sends the notices. That’s the one deadline you cannot afford to miss, because that’s where the flat penalties genuinely start.
The scariest number in this scenario is the one you find on a forum, applied to the wrong rule. The actual rule is kinder than the internet suggests — provided you keep moving forward.
For the full overview of access and registration problems — locked out of your account, lost UTR, never registered — see our can’t access your HMRC account hub. For the complete overview of all Self Assessment penalties, interest, and the pay-vs-appeal decision tree, see our Self Assessment penalties guide. If you’ve already missed a filing deadline on a return HMRC issued, see our missed Self Assessment deadline guide. For the full penalty scale (the £100, £10/day, and 5% surcharges), see what happens when you file late. If you’ve received a penalty you want to challenge, see how to appeal an HMRC penalty. For more plain-English explanations of HMRC terms, browse the full jargon buster.