If you’re self-employed, it’s your responsibility to pay your taxes on time and file your self-assessment tax return. If you miss the deadline or pay late, the tax office will come knocking with their fines. So, let’s get the lowdown on the different penalties HMRC has in store for us.
What penalties can I be charged for by HMRC?
There are various self assessment late payment penalties that you might receive, all for different reasons. The most common, however, are late submission and late payment, which we explain in more detail below, alongside some others.
- Late submission
The deadline for tax returns is 31st January for online submissions and 31st October for paper submissions. Submitting your tax return after the deadline will get you hit with an initial £100 penalty.
After 3 months, additional daily penalties of £10 per day will be applied, up to a maximum of £900 if the return has still not been submitted.
After 6 months, a further penalty of 5% of the tax due or £300, whichever is greater will be applied.
After 12 months, an additional 5% or £300 charge, whichever is greater will be applied.
- Late payment
Payment of your tax liability is, put simply, also due by 31st January. Failure to make payment will result in the following penalties:
- 30 days overdue – 5% of the outstanding liability
- 6 months overdue – a further 5% of the outstanding liability
- 12 months overdue – a further 5% of the outstanding liability
Interest is also applied on late payments at a rate of the Bank of England base rate (3.75% for 2026/27) plus 4%. Currently then this would be a rate of 7.75%.
- Failing to notify
If you don’t let HMRC know about your tax liability within the time limits, you can be charged a penalty for ‘failure to notify.’ HMRC will calculate ‘potential lost revenue’ and charge a penalty ranging from 0 – 100% of this, depending on whether your failure to notify was accidental or deliberate, whether you notified HMRC and the length of time taken to notify.
- Errors
Misrepresenting or understating your tax liability can get you charged with a penalty fee ranging from 0 – 100% of the outstanding tax bill, again depending on whether the errors were accidental or deliberate and whether you notified HMRC or they picked up on the errors. Yikes!
Can I appeal a penalty?
Reasonable excuses
If you have a reasonable excuse for missing the tax deadlines, such as bereavement, severe illness, or unexpected hospital stays, you can appeal the penalty. HMRC expects you to take ‘reasonable care’ with your self-assessment, so keep accurate records and seek professional advice if you need it. Technical issues can also be valid.
How to appeal late payment self assessment penalty
HMRC will offer you a review at the same time as issuing you the penalty decision for indirect taxes, such as VAT. You can accept this review, or you can appeal to a tax tribunal.
To appeal direct tax (e.g. Income Tax) penalties, you’ll have to ask HMRC to review your case again and consider your appeal – either online through the Government Gateway portal or by post. You can find out more here.
How to pay self assessment late payment penalties
There are several ways to pay a penalty – online, by direct debit or bank transfer, with a personal debit or corporate credit card, or by postal cheque. Unfortunately, you can’t pay your penalty at the Post Office anymore.
How can Caroola help?
Keeping track of your tax obligations can be a real pain, especially when you’re busy running your own business. But don’t fret.
With our sole trader and accountancy packages starting at just £28 + VAT a month, Caroola is here to support you with all your tax and accountancy needs – including filing your self-assessment tax return.