Dealing with HMRC penalties is, unfortunately, a reality for a significant number of taxpayers each year. The good news is that the penalty structure is transparent — HMRC publishes exactly what applies and when — and there are routes to appeal or arrange payment if you find yourself in difficulty. The worst thing you can do is ignore it.
Late filing penalties for Self Assessment
The online Self Assessment filing deadline is 31 January. Miss it, and penalties start immediately:
Day 1 late: An automatic £100 fixed penalty. This applies even if your tax bill is nil — the penalty is for the late return itself, not the tax owed.
3 months late (1 May): Daily penalties of £10 per day begin, up to a maximum of £900 (90 days). These are charged on top of the initial £100.
6 months late (31 July): A further penalty of 5% of the tax due, or £300, whichever is greater.
12 months late (31 January the following year): Another 5% of tax due or £300 (whichever is greater), again on top of all previous charges. In cases of deliberate concealment of information, this final penalty can rise to 70% or 100% of the tax due.
The cumulative effect can be substantial. A return filed 13 months late with a tax bill of £5,000 could result in penalties of £100 + £900 + £250 + £250 = £1,500, plus interest on the unpaid tax. That's 30% of the original bill in penalties alone.
Late payment penalties and interest
Filing late and paying late are treated separately by HMRC. The payment deadline is also 31 January (for the balancing payment for the previous year and the first payment on account for the current year).
Interest runs from 31 January on any unpaid tax at HMRC's current interest rate (based on the Bank of England base rate plus 2.5%). As of 2026, this rate is meaningful — not trivial.
In addition to interest, late payment penalties apply:
30 days late: 5% of the unpaid tax.
6 months late: A further 5% of the unpaid tax still outstanding.
12 months late: Another 5% of the unpaid tax still outstanding.
So the total late payment surcharge can reach 15% of the outstanding tax, on top of interest. This is separate from, and in addition to, any late filing penalties.
Can you appeal against a penalty?
Yes — and it's worth doing if you have a genuine reason for the delay. HMRC will cancel penalties where there is a "reasonable excuse" for the failure. What counts as a reasonable excuse includes serious illness (yours or a close family member's), bereavement near the deadline, natural disasters, postal problems with HMRC, or HMRC's own system failures.
What doesn't count as a reasonable excuse: not having received a reminder (you're expected to know the deadline), being too busy, not knowing about Self Assessment, or the return being complicated. These are consistently rejected.
To appeal, you need to write to HMRC within 30 days of the penalty notice, explaining the reason for the delay and providing any supporting evidence. You can do this online through your Personal Tax Account or by post. HMRC will consider the appeal and either cancel the penalty, reduce it, or uphold it — in which case you have the right to a further review or to appeal to the independent First-tier Tax Tribunal.
What if you can't pay your tax bill?
This is something I always tell clients: if you can't pay, contact HMRC as early as possible. Don't wait. HMRC has a Time to Pay arrangement (TTP) that lets you spread your tax liability over a period — typically 12 months for personal tax, sometimes longer depending on circumstances. You'll pay interest on the amount, but the penalty structure is suspended while a TTP agreement is in place.
For bills under £30,000, you can often set up a Time to Pay arrangement yourself online through your Personal Tax Account without speaking to anyone. For larger amounts, you need to call HMRC's debt management team — the number is on the back of the payment demand. Be prepared to provide details of your income, expenditure and why you can't pay in full.
The critical thing is that HMRC expects you to approach them proactively. If you ignore the bill and HMRC has to chase you, the conversation becomes much harder and your options narrow.
A note on payments on account
One thing that surprises many people in their first year of Self Assessment is that they may face two tax bills at once: the balancing payment for the previous year and the first payment on account for the current year, both due on 31 January. If you're not expecting this, the total can be significantly higher than you budgeted for.
Payments on account are each 50% of the previous year's tax bill, paid in advance on 31 January and 31 July. If you expect your income to be lower in the current year, you can apply to reduce them — but if you reduce them and your income turns out to be the same or higher, HMRC will charge interest on the underpayment.
The best defence against penalty problems is straightforward: file early, pay on time, and contact HMRC the moment you know you'll have difficulty. None of that requires an accountant — but it does require not leaving things until January.