Thousands of UK homeowners with solar panels could be hit with unexpected £100 fines this week as the HMRC paper tax return deadline approaches.
Many are unaware that income earned from selling unused solar energy back to the grid could push them over the £1,000 tax-free trading allowance.
With the deadline falling on Friday, homeowners are being urged to check their earnings now to avoid costly penalties.
Solar earnings could tip homeowners over HMRC’s tax-free threshold
With more than 1.6 million UK homes now fitted with solar panels, many are generating extra income through the Smart Export Guarantee (SEG) - payments for selling unused electricity back to the grid.
While the average household can make around £300 a year, this amount can easily exceed HMRC’s £1,000 trading allowance when combined with other side hustles or freelance income.
Those who cross the threshold must declare their earnings or risk an automatic £100 fine if their tax return isn’t filed on time, even if no tax is owed.
George Penny, Director at The Solar Co and renewable energy expert, explains: “With hundreds of thousands of Brits earning through solar, it’s easy for households to unintentionally cross the threshold - many simply aren’t aware they need to declare this income.”
Paper filers face earlier deadline — and potential penalties
HMRC’s paper self-assessment deadline closes on Thursday, October 31, while online filers have until January 31, 2026.
According to government data, around 2.89% of taxpayers still rely on paper forms, meaning over 18,000 solar panel owners could fall foul of the deadline if their returns don’t arrive in time.
Missing the deadline triggers an immediate £100 fine, with further penalties increasing the longer the return remains unsubmitted.
Penny highlights the urgency: “Even a small delay in submitting a paper return can result in penalties. Homeowners need to act now to avoid unnecessary fines.”
Four quick checks to stay HMRC-ready
Homeowners are being urged to take these four simple steps to ensure they’re ready before the deadline:
- Check your SEG statements – Review your energy export statements to confirm how much income you’ve earned from selling power back to the grid. Add this to any other side hustle income to see if you’ve exceeded the £1,000 allowance.
- File online for extra time – If you miss the paper deadline, you can still file online until January 31, 2026. The digital process is faster, more accurate, and helps avoid late penalties.
- Watch out for HMRC scams – Over 170,000 scam reports were filed last year, with victims losing an average of £1,730. Always use official .gov.uk websites and never click on links in suspicious emails or texts.
- Don’t ignore HMRC letters – If you’ve received a notice to file a return, you must complete it - even if you believe your solar income is below the threshold. Ignoring it can trigger automatic fines that quickly escalate.
