Self-Assessment tax returns can feel like a chore, but missing the submission or payment deadlines can lead to penalties that could have been easily avoided. To help you stay informed and avoid unnecessary costs, here is a breakdown of the penalties HMRC imposes for late submissions and payments for Self-Assessment.
Deadlines You Shouldn’t Miss
The key deadlines for Self-Assessment are crucial to remember. For online returns, the filing deadline is 31 January following the end of the tax year. If you are filing a paper return, the deadline is earlier, on 31 October. Payments must also be made by 31 January for balancing payments and the first payment on account, while the second payment on account is due by 31 July.
Penalties for Late Filing
HMRC enforces strict penalties for missing the Self-Assessment filing deadline. If your tax return is late by up to three months, you will face an initial penalty of £100, regardless of whether you owe any tax or have already paid your bill. Beyond three months, daily penalties of £10 per day may apply for up to 90 days, amounting to a maximum of £900. If your return is six months late, an additional penalty of 5% of the tax due or £300 (whichever is greater) will be imposed, with the same penalty repeated at 12 months. In severe cases, HMRC may charge up to 100% of the tax owed.
Penalties for Late Payment
Late payments also attract penalties. If you fail to pay your Self-Assessment tax bill on time, a 5% penalty of the tax due will be applied once your payment is 30 days late. An additional 5% penalty is added at six months, with another 5% at 12 months. It is important to note that these penalties are separate from interest charges, which understanding-penalties-for-late-self-assessment-submissions-and-paymentsaccumulate daily on overdue amounts.
Interest on Late Payments
In addition to penalties, HMRC applies interest on late payments, which is calculated as the Bank of England base rate plus 2.5%. As of January 25, 2025, the interest rate is 4.75%. However, from April 6, 2025, the surcharge will rise by 1.5 percentage points, increasing the rate to the Bank of England base rate plus 4%. If the base rate remains at 4.75%, this adjustment will result in an interest rate of 8.75% on overdue payments. Paying on time is the most effective way to avoid these additional costs.
How to Appeal a Penalty
If you believe a penalty was issued unfairly, you have the right to appeal to HMRC. Valid reasons for appealing include serious illness, bereavement, unforeseen postal delays, IT issues during submission, or an error on HMRC’s part that delayed your ability to file or pay. Appeals must be submitted within 30 days of receiving the penalty notice.
Tips to Avoid Penalties
Avoiding penalties starts with staying organised and proactive. Set reminders using digital calendars or apps to ensure you meet key deadlines. Keeping your income and expense records up to date throughout the year makes the filing process smoother. Submitting your tax return early not only reduces stress but also provides time to correct any mistakes and budget for your payment. For added peace of mind, consider working with an accountant who can ensure accuracy and timely submissions.
How We Can Help
At Daykin Scott Accountants, we specialise in helping individuals and businesses stay compliant with their tax obligations. From organising your records to filing your Self-Assessment tax return on time, we’re here to make the process stress-free. Contact us today for professional assistance.
Don’t leave your Self-Assessment until the last minute. Let us help you avoid penalties and keep your finances in order.
