HMRC can charge penalties for late filing, late payment, providing inaccurate information, and failing to notify HMRC of a new tax liability. The amounts vary significantly depending on the type of breach, how long it continues, and whether it is deliberate. For Self Assessment in 2025/26, a return filed just one day late triggers an automatic £100 penalty, even if no tax is owed.
Late filing penalties for Self Assessment
The penalty structure for late Self Assessment tax returns in 2025/26 is as follows. Penalties escalate the longer a return remains outstanding.
| Delay | Penalty | Notes |
|---|---|---|
| 1 day late | £100 | Automatic. Applies even if no tax is owed. |
| 3 months late | £10 per day (up to 90 days) | Maximum additional £900 in daily charges. |
| 6 months late | Greater of £300 or 5% of tax owed | Added on top of earlier penalties. |
| 12 months late | Greater of £300 or 5% of tax owed | Can rise to 100% of tax due in deliberate cases. |
For a taxpayer with a moderately sized tax bill who files 12 months late, total filing penalties can reach £1,600 before interest and payment penalties are included.
Late payment penalties for Self Assessment
Late payment penalties are separate from filing penalties and apply to any unpaid tax after the 31 January deadline. The late payment regime tightened in April 2025.
| Delay | Penalty |
|---|---|
| 1 to 14 days | No penalty. Interest accrues from day 1. |
| 15 to 30 days | 3% of unpaid tax |
| 31 days | Further 3% (total 6% of unpaid tax) |
| Day 31 onwards | Additional 10% per annum, calculated daily on outstanding balance |
Late payment interest is charged separately on top of penalties. As of May 2025, the interest rate is 8.25% per annum (Bank of England base rate plus 4%). This is calculated daily on the outstanding balance until payment is made in full.
Late payment penalties for VAT
The new VAT penalty regime, which also changed in April 2023 and was further updated in April 2025, works differently to the Self Assessment system. There is no penalty for the first late payment, provided it is paid within 30 days.
| Delay | Penalty |
|---|---|
| 1 to 14 days | No penalty |
| 15 to 30 days | 3% of VAT owed at day 15 |
| 30 days | Additional 3% of VAT owed at day 30 (total 6%) |
| Day 31 onwards | 10% per annum daily rate on outstanding balance |
Late filing penalties for Corporation Tax
Corporation Tax returns must be filed within 12 months of the end of the accounting period. Filing late attracts a separate set of penalties.
| Delay | Penalty |
|---|---|
| 1 day late | £100 |
| 3 months late | Additional £100 |
| 6 months late | 10% of unpaid Corporation Tax (HMRC estimate) |
| 12 months late | Further 10% of unpaid Corporation Tax |
The government confirmed in the Autumn Budget 2025 that it would double the penalty for submitting a Corporation Tax return late, effective from 1 April 2026. The first-stage penalty will increase from £100 to £200.
Inaccuracy penalties
If a tax return contains errors that result in underpaid tax, HMRC can charge an inaccuracy penalty based on the seriousness of the mistake. The potential lost revenue is the amount of tax HMRC would have missed without correcting the error.
| Type of inaccuracy | Penalty range | Disclosure type |
|---|---|---|
| Careless | Up to 30% | Lower if unprompted disclosure |
| Deliberate | Up to 70% | Reduced for prompted disclosure |
| Deliberate and concealed | Up to 100% | Maximum for deliberate concealment |
Unprompted voluntary disclosure before HMRC raises an enquiry attracts significantly lower penalty rates. If HMRC identifies the error first, the rates are higher.
Failure to notify penalties
Failure to notify HMRC of a new taxable source, such as becoming self-employed, receiving rental income, or realising a capital gain, can result in penalties on top of the tax owed. The penalty rate depends on whether the failure was careless or deliberate, and whether it involved an offshore element.
The new points-based system from April 2026
From 6 April 2026, taxpayers who join Making Tax Digital for Income Tax Self Assessment (MTD ITSA) with income above £50,000 will move to a points-based penalty system for late submissions.
- Each missed quarterly update earns one penalty point.
- A financial penalty of £200 is triggered when four points accumulate.
- Points expire after a set period, provided the taxpayer remains compliant.
- A soft landing applies for the first year: no penalty points are issued for the first four missed quarterly updates in 2026/27.
- The annual final declaration still carries normal penalties if missed.
The threshold will extend to incomes above £30,000 from April 2027, and above £20,000 from April 2028.
Can HMRC cancel a penalty?
HMRC can cancel or reduce a penalty if you have a reasonable excuse. Acceptable reasons include serious illness, a bereavement immediately before the deadline, or a failure in HMRC's own systems. Not acceptable as excuses are relying on an accountant who failed to file on time, not having the money to pay, or simply forgetting the deadline.
You have 30 days from the date on the penalty notice to appeal. For guidance on the appeals process, see our how to appeal an HMRC penalty guide.
How to reduce the impact of penalties
- File your return as early as possible, even if you cannot pay the tax immediately.
- If you cannot pay, set up a Time to Pay arrangement before the deadline. See how to arrange a payment plan.
- Make voluntary disclosure of inaccuracies before HMRC raises an enquiry. This attracts lower penalty rates.
- Keep accurate records so that compliance checks can be resolved quickly and with minimal penalty exposure.