Penalties for late filing or payment

What if you are late filing your return or paying your tax?

If you’re late in filing your return or paying your tax, it’s strongly advised to adhere to the due dates to avoid potential consequences. Failure to comply not only increases the risk of HMRC initiating an enquiry but also subjects you to penalties and interest, as outlined below.

There’s an automatic non-refundable penalty of £100 if the return isn’t filed by the due date, usually January 31st following the end of the tax year. Penalties may be waived with a reasonable excuse, though this doesn’t include ignorance or negligence.

For returns over three months overdue, there’s a penalty of £10 for each additional day it’s late, up to a maximum of 90 days. If the return is over six months late, a further penalty of £300 or 5% of the liability (whichever is higher) applies. However, daily penalties don’t apply for Capital Gains Tax returns.

Filing more than twelve months after the deadline incurs a penalty of £300 or 5% of the liability (whichever is higher), in addition to the previous penalty. In serious cases, the penalty could be up to 100% of the tax due.

Late payments accrue interest, and a 5% surcharge applies if the previous tax year’s liability isn’t paid within 30 days after January 31st following that tax year. Another 5% surcharge applies if it isn’t paid by July 31st following that, and a third 5% surcharge if it isn’t paid by the following January 31st.

If you’re unable to pay, it’s advisable to arrange a payment plan with HMRC. You can contact the Business Payment Support Service Helpline at 0300 200 3835 for assistance.