If you miss the deadline for submitting your Self Assessment tax return and do not have a reasonable excuse, HM Revenue and Customs (HMRC) will issue penalties that increase the longer the return and payment remain outstanding.
Penalties for Late Filing
- If the midnight deadline is missed, an initial fixed penalty of £100 is charged , even if there is no tax to pay.
- After three months , daily penalties of £10 per day apply, up to a maximum of £900 .
- Further penalties are imposed at six months and twelve months , with interest added on top.
Penalties for Late Payment
- After 30 days , a penalty of 5% of the unpaid tax is applied.
- After six months , another 5% penalty is added.
- After twelve months , an additional 5% penalty is charged.
- Interest is also charged on late payments, increasing the total amount owed.
Late Payment Interest
HMRC charges interest on late tax payments from the day after the payment deadline until the tax is paid in full. The interest rate is set at 2.5% above the Bank of England base rate and is subject to change. This means that delaying payment can significantly increase the total amount owed, making it crucial to settle your tax bill as soon as possible.
Reduced Payments on Account and HMRC Reinstatement
If you have reduced your payments on account but later find that you owe more tax than expected, HMRC may reinstate the original payment amount . This reinstatement will result in additional interest charges on the underpaid amount, calculated from the original due date. To avoid unnecessary interest, ensure that any reduction in payments on account is based on accurate estimates of your taxable income.
Avoiding Penalties
If you know you are liable to complete a return and have a rough idea of how much tax you owe (based on previous returns), you can make a payment before submitting to avoid accumulating interest charges. Once your calculations are done, you can file your return as soon as possible to correct any differences. Any shortfall must be paid, while overpayments will be refunded by HMRC.
Reasonable Excuses for Late Submission
HMRC may accept a late submission if you have a reasonable excuse, such as:
- Bereavement (e.g., the death of a close family member)
- Severe illness or hospitalisation
- Life-threatening medical conditions
- Technical issues (e.g., HMRC system failures, software problems, or computer breakdowns)
- Fire, flood, or theft destroying important records
It is always best to inform HMRC as soon as possible if you believe you have a valid reason for missing the deadline.
For more information on how we can help you navigate these challenges, contact Chart Accountancy today. We’re here to support you every step of the way.
