Penalties for late self-assessment returns and payments

With the tax return season just over, a lot of the time we get clients who for various reasons could not send us their information to prepare and submit their tax returns online before 31 January. They often ask if there are penalties for paying the tax late or not submitting their return on time. The answer is yes to both unless the taxpayer had a reasonable excuse for being late in which case it can be appealed.

So what are the penalties for late filing of self-assessment tax returns?

In the UK, if you file your self-assessment tax return after the deadline, you may face the following penalties:

• An initial penalty of £100 for filing up to 3 months late.
• Additional daily penalties of £10 per day for up to 90 days, making a maximum penalty of £1,000.
• Further penalties of £300 or 5% of the tax due, whichever is greater, for filing 6 months late.
• Finally, penalties of £300 or 5% of the tax due, whichever is greater, for filing 12 months late, plus an additional £300 or 5% of the tax due for each further 6 months that the return remains outstanding, up to a maximum total penalty of £3,000.
  
  

It’s important to note that these penalties are in addition to any interest and surcharges you may owe on the tax due.

Is there any interest for the late payment of income tax?

In the UK, if you pay your self-assessment tax bill late, you will be charged interest. The current interest rate for late payment of tax is 6% per annum. The interest is charged from the original due date of the tax payment until the date it is paid in full. Additionally, you may also face surcharges for persistent late payment.

Is it possible to pay income tax by instalments?

Absolutely. After the tax return has been submitted and if you have a gateway account, you can log in and complete the application to pay the tax in instalments. We only recommend doing this if you received an unexpected tax liability and cannot cover it in one go because HMRC will charge you interest for the privilege of paying in instalments.  If you don’t have a gateway account, you can also call HMRC directly and ask them to setup a payment plan for you.