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Late payment penalty

  • 2 min read

When you pay your tax bill late, HMRC will charge a late payment penalty 😱

It’s a separate penalty from what you’re charged for filing your tax return late or failing to notify HMRC of a change in your tax liabilities.

They’ll send a Penalty Explanation Letter detailing the period your penalty covers.

How late you are Late payment penalty
30 days 5% of outstanding tax on that date
6 months Further 5% of outstanding tax
12 months Further 5% of outstanding tax

To compensate for the delay in payment, HMRC automatically charges interest on any penalty fee from the date the payment is due.

To avoid a late payment penalty, you can arrange a payment plan with HMRC before the tax is due.

Appealing a late payment penalty

You can appeal against a late payment penalty in three ways:

  • Online
  • Calling the Self Assessment Helpline
  • Using the appeal form that comes with your penalty letter

HMRC will only accept your appeal if you have already sent your tax return. HMRC will use an officer (who’s not previously been involved with your penalty) to review your appeal. You won’t have to make any payments until after the appeal has been settled.

What counts as a reasonable excuse?

A reasonable excuse for missing the payment could be:

  • Service issues with HMRC online services, your own computer/software or postal delays
  • Fire, flood, or theft
  • A partner or close relative dying
  • A hospital stay, serious/life-threatening illness or disability

When should I appeal? 

You should appeal within 30 days of getting the penalty. If you appeal and it’s successful, the late payment penalty and any interest will be cancelled. 

If you paid your penalty during the appeal, it will be paid back with interest from the date you paid. 

But if your appeal is unsuccessful, HMRC will get in touch to explain why. They’ll ask you to pay the late payment penalty plus any interest.

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