April: The Costs of Missing Tax Deadlines in the UK

Failing to meet tax filing or payment deadlines can lead to significant financial penalties, which can escalate over time. Whether you’re an individual taxpayer, self-employed, or a business owner, Business owner & expert at A1SEO, Graham Grieve says: “ It’s crucial to understand the implications of late penalties and the amounts you can be fined to avoid unnecessary costs and ensure compliance with HMRC regulations.”

Late Filing Penalties

Self Assessment Tax Return:

• Day 1: Immediately after the deadline passes, you’ll incur a £100 penalty, regardless of whether you owe tax or not.
• 3 Months Late: Additional daily penalties of £10 per day, up to a maximum of 90 days (£900), start accruing if the return is over three months late.
• 6 Months Late: An additional £300 or 5% of the tax due, whichever is higher, is charged at 6 and 12 months late.

Corporation Tax Return:

The penalties are similar in structure to Self Assessment. Initial penalties start at £100, increasing over time and with subsequent offences.

Late Payment Penalties

Income Tax:

• 30 Days Late: You’ll face a penalty of 5% of the tax due.
• 6 Months Late: An additional 5% of the unpaid tax is charged.
• 12 Months Late: Another 5% of the unpaid tax is added to your bill.

Corporation Tax:

• Corporation Tax doesn’t follow the same percentage-based penalties for late payment as income tax, but interest is charged on late payments, and the company can face enforcement actions to recover the tax owed.

Interest Charges

Apart from penalties, HMRC also charges interest on both unpaid tax and penalties, which means the longer the delay, the more you’ll owe. The interest rate is determined by HMRC and can change over time.

Avoiding Penalties

• Be Proactive: File your returns and pay your taxes well before the deadline. Don’t wait until the last minute.
• Use Reminders: Leverage technology to set reminders for your tax deadlines.
• Seek Help if Needed: If you’re unsure about your tax obligations or if you’re facing financial difficulties, it’s better to seek advice or contact HMRC before the deadline passes. HMRC may offer arrangements to spread out payments if you’re struggling to pay what you owe.

Business owner, Graham Grieve of A1SEO says:

The key to avoiding late penalties is understanding your tax obligations and planning accordingly. While HMRC penalties can be hefty, they are entirely avoidable with diligent planning and timely action. Remember, if you’re ever in doubt about your tax situation, it’s always wise to consult with a tax professional to ensure you’re on the right track and to avoid the pitfalls of late penalties.