Late tax return penalties

Every year almost 1 million people miss their tax filing deadline. But what are the penalties for a late tax return?

Penalties for a late tax return

There are in fact two different penalties if you file a your self assessment late. There is the penalty for filing late and this is a separate penalty for paying your tax bill late. It's important to note that even if you owe no money in taxes, or in fact are due a refund you will still be fined for filing late.

Filing late penalty

There are a series of fines applied simply for filing your return late.

  • £100 fine for being 1 day late
  • After 3 months late a £10 a day fine is applied for the next 90 day, costing up to £900
  • After 6 months late another £300 fine is added, or 5% of the outstanding tax bill, whichever is greater
  • After 12 months late another £300 or 5% bill is applied.

So the total fines for filing a year late will come to £1,600!

Late tax bill penalty

If you owe a tax bill and miss the payment deadline you will have additional fines and interest in addition to the late filing fines above

  • Interest is added to the outstanding bill, currently this interest rate is 3% a year
  • When 30 days late a 5% penalty of the amount outstanding (including fines) is added to your bill
  • When 6 months late another 5% penalty is added to your bill
  • When 12 months late another 5% late penalty is applied

So paying your tax bill a year late will lead to interest added of over 18%.

These fines are automatic, however in certain specific circumstances such as such as death of a relative, serious illness or fire they may be waived

Recently the government has announced a review of the late filing penalties and is looking into replacing them with a points based system similar to speeding tickets on a driving license. However this won't come in until 2020 at the earliest.

For now, the fines for missing the self assessment deadline can wrack up very quickly, even if you do not owe much in tax. If you are late with tax return you should file it as quickly as possible to stop the late payment fines building up. Because of this TaxScouts prioritizes late filings to help stop those fines accruing.

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