Gig work - what to do if you are behind on your taxes

Introduction

We know that some of those in the gig economy may be behind with their taxes for all sorts of reasons.

It is likely you will be in one of two situations if you are behind with your taxes:

1. You have registered to do a self assessment tax return but have fallen behind with completing and submitting the tax returns HMRC have asked you to file (see the heading Late filing below)
2. You have not yet registered to do a self assessment tax return with HMRC and so have not been asked to complete any tax returns (see the heading Failure to notify below)

Our page on Digital platform reporting rules looks at how HMRC might know you are behind with your taxes as well  provides some useful information on how to handle an HMRC enquiry.  

Late filing

Once you are registered for self assessment with HMRC, in April every year you should receive a notice from HMRC telling you to file (or submit) a tax return for the tax year just ended. 

The online filing deadline for a tax return will usually be 31 January after the end of the tax year. So, a tax return for the 2025/26 tax year is due for submission (filing) by 31 January 2027. Penalties are automatically applied if you have been sent a notice to file a tax return but you do not meet the deadline. The penalties can be quite harsh and are applied even if you have no tax or National Insurance contributions to pay for the tax year to which the penalty relates.

If you have received a penalty notice from HMRC for not filing a tax return – do not ignore it. The amount of penalty will increase if you do not sort this out with HMRC. It may be the case that you can and want to appeal the penalty, in which case there are time limits to do so. For more information, see our Appealing a tax decision page.

HMRC may accept late appeals which are outside the specified time limits, particularly if you have a reasonable excuse for not dealing with matters in a timely manner. 

A reasonable excuse might include where you did not understand the system and needed help from, for example, the tax charity TaxAid or from HMRC. In this case, you are usually expected to have taken reasonable steps to get help with your tax affairs. How difficult your tax affairs are and why, in your particular circumstances, you have found them too difficult to deal with, will also be relevant when explaining why you think you have a reasonable excuse.

If you did not file your tax return because you did not consider it was required (for example, because you are no longer self-employed), then you need to let HMRC know. HMRC may be able to withdraw the tax return, and if they do that, you will no longer need to file it and any late filing penalties will be set aside. 

If you did need to submit the tax return but you are unable to do so and cannot afford tax advice, then you should contact the tax charity TaxAid (see the guidance under the heading TaxAid below) to see if they can help you get your tax affairs in order.

Remember, not everyone who is self-employed needs to send HMRC a tax return. This might include where you are self-employed but your total income from gig work does not exceed £1,000 and you have no other trading or miscellaneous income. In this situation your entitlement to the trading allowance means there is no tax to pay and nothing to report to HMRC. But you must keep track of your income to make sure it is £1,000 or below. If your income is more than £1,000 you can still benefit from the trading allowance. See our Trading allowance page for more details.

Failure to notify

This could apply to the situation where you have not yet registered to do a self assessment tax return with HMRC but have been working on a self-employed basis. 

Strictly, there are penalties for failing to notify HMRC of a liability to tax by 5 October following the end of the tax year in which liability arose. So, if you owe tax on a new source of self-employment income which began in the 2025/26 tax year but did not tell HMRC about it by 5 October 2026, you have failed to notify HMRC.

These penalties are based on the tax (and Class 2 and 4 National Insurance contributions) that could potentially be lost because of the failure to notify on time (‘potential lost revenue’). We explain how ‘failure to notify’ penalties are calculated on our Tax penalties and interest page. 

Although these penalties may sound scary – don’t panic. They will not necessarily be relevant: 

• You may not yet be late in notifying. We cover how and when to register for self assessment in detail on our page Self-employment: registering for tax and NIC and we explain what happens if you miss the filing deadline (5 October after the end of the tax year) in the Registering late section of our Registering for self assessment page.
• Even if you are late in notifying, ask yourself if you have a ‘reasonable excuse’ for having not done what you should have. If circumstances stopped you meeting your obligations, then you may have one and you can and should appeal the penalty. 

If you have failed to notify HMRC of your need to do a tax return, whether or not you think a penalty is due, then you should seek advice on the best way to bring your tax affairs up to date as soon as possible. This may not be as hard as you think, as we explain under the heading TaxAid below.

You should also read the Tax returns for prior years section below. 

Concern about tax payments

The first thing to say is that bringing your tax affairs up to date by filing tax returns for past years does not necessarily mean you will have a large tax bill to pay. It depends on the amount of profit you make from your work and your other circumstances.

If you do have a tax bill to pay and can’t pay it, there are steps you may be able to take, including: 

• Reviewing your tax liability to make sure you are claiming all the reliefs and allowances that you are entitled to.
• Ensuring you take account of all tax already paid. For example, sometimes you might have already paid some tax towards your final bill for the year. Is this reflected in your calculation? It is a good idea to check.
• Reducing or removing payments on account where appropriate. 
• Setting up a Time to Pay arrangement with HMRC

The situation may not be as bad as you think if you have problems paying what is due but you should act quickly, for example by calling HMRC and explaining your circumstances or asking TaxAid to help you (for more information see the heading TaxAid below). See our detailed guidance on what to do if you can’t pay your tax bill on our page Tax payment problems and debt. 

So do not delay filing outstanding tax returns if you don’t think you can pay the tax bill that could be due. This is only likely to make matters worse.

Tax returns for prior years

HMRC can ask you to pay back-taxes for a limited number of years, depending on the circumstances. You have to self-assess your behaviour to work out the number of years that apply to you (this will also help you to work out any penalty you have to pay if there are some taxes that you owe to HMRC).

So, for example, if you completed a self assessment tax return, but did not include the gig economy income in it, the rules are basically as follows:

• If you took care to make sure your tax return was correct but still didn’t pay enough tax, HMRC have 4 years from the end of the tax year concerned to require back taxes to be paid.
• If you did not pay enough tax because you were careless, the time limit is 6 years.
• If you deliberately misled HMRC about this income, HMRC can ask for this tax for tax years going back up to 20 years.

There are similar rules if you failed to notify HMRC of the need to complete a tax return to declare your gig economy income in the first place. You can find information summarising HMRC’s assessing time limits in HMRC’s Compliance Manual on GOV.UK. You can also find information about the various behaviours, such as carelessness, in the manual. If you are in any doubt as to which category your behaviour best fits, you should seek some professional advice (we explain how to do this under the heading TaxAid below).

HMRC letters

You should be aware that HMRC receive information from third parties about income that people receive from selling goods or services. This can be used to identify people who need to bring their tax affairs up to date. HMRC have written to a number of people who have received some income from online platforms such as Amazon, eBay, Etsy and Wayfair, who they think may need to take action. The letters also may include a certificate of tax position, which HMRC ask the individuals to complete and return to them. 

These letters may be based on information HMRC have collected independently of the information that digital platforms need to provide to HMRC from 1 January 2024. We explain more about these new reporting requirements on our Digital platform reporting rules page.

Our dedicated page of guidance on One to many letters covers what you should do if you have received a letter from HMRC asking about income you have earned. You should consider getting some professional advice if you think you have some additional income you should have told HMRC about (including from TaxAid – see below). 

TaxAid

If you are on a low income (usually under £28,000), the tax charity TaxAid are familiar with cases such as sorting out the tax position for people behind with their taxes and can offer free, independent advice and assistance on the matter.

This can include talking to HMRC on your behalf and helping you to:

• work out whether you needed to file a tax return in the first place for any particular year,
• support you to register for a tax return if you need to and have not already,
• help you understand what income and expenses to declare,
• complete any outstanding tax returns,
• decide on the best course of action to take to deal with any old tax years (for instance, by simply writing a letter or using the disclosure facility),
• appeal against any penalties charged by HMRC if you had a reasonable excuse for not having done something that you should have done, and
• understand how to negotiate ‘Time to pay’ arrangements taking account of your individual health and financial circumstances if you have a tax payment which you cannot afford to pay.

A case study looking at TaxAid’s help in practice can be found on their website.

Claiming benefits

Some gig workers, especially those delivering goods or takeaways may be struggling to earn enough money due to a drop in demand at the same time as an oversupply of workers. If options for other work are limited, benefits can be a lifeline. 

But what if you are behind on your taxes and haven’t paid any National Insurance contributions? Does this mean you can’t claim benefits? The good news is that although you will need to sort out your taxes in the longer term, if your work has reduced or stopped, you might still be able to claim some welfare support from the benefits system.

Types of benefit

There are two main types of benefit (as explained by Turn2Us), these are means tested and non-means tested.

Some non-means tested benefits are ‘contributory’ benefits, that is benefits which are only payable if a person has paid enough National Insurance contributions. Therefore, if your tax affairs are not up to date, you may not have paid enough National Insurance contributions to receive contributory benefits.

However, means tested benefits don't rely on whether you have paid any National Insurance contributions. Instead, they usually look at how much income you have, any savings you have and calculate whether you are entitled to welfare support either in full or to top up your income to a certain level. They may also take into account your partner's circumstances if you are part of a couple. You can get means-tested benefits by themselves or sometimes as a top-up to contribution-based benefits.

The main means tested benefit you may be able to claim whether or not you are working is universal credit. For those who have reached their state pension qualifying age, it is pension credit, as explained on GOV.UK.

The Department for Work and Pensions (DWP) pays universal credit, and your claim is based on your current circumstances such as what support you need now, rather than what may have happened in the past, although the DWP may ask you about previous earnings to help them decide whether the benefit cap applies. There are some benefit calculators online that can give you a rough idea of how much you may be entitled to but the best way to check is to speak to a welfare rights adviser, as explained under the heading More information below.

Claims for universal credit are usually made online and you will need to prove your identity to make the claim, but there are lots of ways you can do this. You might need to explain what has been happening with your income when you are contacted by the DWP about your claim to the extent it is relevant to your work capability, claimant commitment and so on.

More information

The benefits system is complicated. This page is intended to give you some basic information, but we always advise you to speak to a welfare rights adviser who can provide information on what you might be able to claim based on your exact circumstances. Our Help with tax from friends, family, professionals or other organisations page gives details of organisations which can help with welfare rights advice, such as Citizens Advice and Advicelocal.

You can use one of the following online calculators to get an idea about what benefits you may be entitled to:

• Entitledto
• Turn2Us
• Policy in Practice

There is also some good information about rent arrears and universal credit from Citizens Advice.