If you miss your filing deadline of 31 Jan, you will face three types of charges –

  • Penalties for not filing the return
  • Penalties for not paying the tax owed to HMRC
  • Interest on tax owed at HMRCs interest rate

Penalties are calculated according to the number of days late, and are added up cumulatively by HMRC.

Let’s assume it’s 1 February 2017, these are the charges faced if your 2015/2016 tax return is not filed and tax of £5,000 remains unpaid until 1 February 2018 at which point the missing return and tax owed is all correctly submitted but 12 months late:

On 1st February 2016:

Filing Penalty: £100

On 30 April 2016 (3 months late so far):

Filing Penalty: £10 per day (subject to a maximum of £900)

Unpaid Tax Penalty: 5% of tax due or £300, if greater

On 31 July 2016 (now 6 months late):

Filing Penalty: £300

Unpaid Tax Penalty: 5% of tax due or £300, if greater

By 31 January 2017 (12 months late):

Filing Penalty: £300

Unpaid Tax Penalty: 5% of tax due or £300, if greater

Based on this scenario total penalties amount to £2,350 plus interest, currently estimated at £150.

It is worth noting, that if the missing return and unpaid tax were both submitted just one day earlier on 31 January, this would have avoided the 12 month late penalty being imposed, saving £550.

After 12 months, or for more serious cases the taxpayer could be asked to pay 100% penalties of the tax due.

If you are struggling to pay your tax bill, HMRC may agree to accept installments and penalties will be suspended.  If an agreement is put in place it is really important that you stick to the payment plan as missing a payment can void the agreement and you could be liable to pay the full amount immediately.

If for whatever reason you have missed submitting your tax return or owe HMRC tax you can make a accurate daily estimate of penalties and interest you may be facing using HMRCs own calculator here.

Anita is a Chartered Accountant, turned blogger and creator of the ever popular free Go Self Employed Email Mini Course, which has been completed by hundreds of attendees all over the UK. Using her 10 years experience in accounting, tax and operations for Small Businesses, Anita is on a mission to make finance simple for the self employed, so they can stop stressing about tax & finances and focus on building profitable businesses which will give them the lifestyle they dream of.