HMRC Penalties

HMRC charge penalties on the late filing of tax returns and submissions, as well as the late payment of tax.

INCOME TAX

The following late filing penalties are applicable if you file your tax return late: 

  • an immediate £100 penalty if not filed by 31 January following the year end

  • additional daily penalties of £10 per day, up to a maximum of £900, after 3 months,  

  • a further penalty of 5% of the tax due or £300, whichever is greater, after 6 months,

  • another 5% or £300 charge, whichever is greater, after 12 months,

For partnerships, all partners will be charged a penalty if the partnership tax return is filed late.

To avoid any penalties, do make sure you leave plenty of time to prepare your tax return.

Late payment penalties of 5% will be applicable if you pay your tax late, on any tax unpaid at: 

  • 30 days 

  • 6 months 

  • 12 months 

Interest will also be charged on any tax amount owed, so do plan ahead to pay your tax on time.

CORPORATION TAX

HMRC will issue an automatic late filing penalty of £100 on the late filing of a company’s corporation tax return CT600, rising to £200. The CT600 is due for filing within 12 months of the company accounting period end (special rules may apply for dormant companies and long periods). Penalties will continue to rise until the CT600 is filed.

Interest is chargeable on the late payment of corporation tax.

VAT

Since January 2023 a new points based penalty regime was introduced for the late filing of VAT returns and late payment of VAT. You can read more about the new penalty regime here.

 

MAKING TAX DIGITAL FOR INCOME TAX

A new penalty regime will be introduced for the late filing of MTD returns for income tax, which was introduced in April 2026. However, HMRC have granted a period of grace on penalties for the first year of the new tax filing regime.

OTHER TAXES

Late filing penalties are also charged on the late filing of returns and declarations, as well as late payment of tax for the following:

  • Capital Gains Tax

  • Inheritance Tax

  • PAYE (including P11Ds)

  • National Insurance contributions

  • Excise duties

  • Stamp Duties

  • CIS

  • and more

PENALTIES ON LATE DISCLOSURES & HMRC ENQUIRIES

Penalties can be up to 100% (and in some cases even 200% for earlier years) of the unpaid tax and late payment interest. In the most serious cases for deliberate tax evasion, the taxpayer could be named as a tax evader or even face criminal prosecution which could result in a jail sentence. But in some cases in the case of error, penalties may be reduced to nil or anywhere up to 30%.

Penalties are calculated on a published scale which takes into account the behaviour of the taxpayer. The penalty is significantly higher if the failure to disclose is deliberate, and even higher if there is an attempt to conceal the lack of disclosure. Typically, in this case, the penalty will amount to another 35%-100% of the unpaid tax.

While penalties can be up to 100% of the tax due, in practice they will usually be less than this, depending on the circumstances. An inadvertent mistake where it can be demonstrated that the taxpayer took reasonable care will not receive a penalty, and carelessness, such as the omission of P11D figures could receive a suspended penalty if there are no other anomalies and a taxpayers tax affairs remain correct in the coming years.

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