Penalties

An initial £100 penalty is charged when a tax return is submitted late, even if there is no tax to pay. Once the return is three months late, daily £10 penalties are applied for up to 90 days. Additional penalties are charged at six months and one year from the deadline. 

Interest will be charged on any tax paid late. The current rate of interest is 7.25% and will increase to 8.75% in April 2025. Any tax due by 31 January 2025 and not paid within 30 days will attract a penalty equal to 5% of the outstanding tax. It is possible to apply to HMRC for a time to pay arrangement. A time to pay arrangement stops the late payment penalty but interest will still be charged. 

Appeals

A taxpayer can appeal against a late-filing penalty if they believe that they have a reasonable excuse. The appeal should be made within 30 days of the date the penalty was issued, but HMRC can accept late appeals. 

HMRC has published guidance on what is and is not a reasonable excuse. Examples of excuses that HMRC may accept include: 

• the death of a partner or close relative;
• a serious or life-threatening illness, an unexpected stay in hospital or delays due to disability or mental illness;
• IT issues such as the taxpayer’s computer failing or problems with HMRC’s online services; and 
• a fire, flood or theft.

HMRC has told ICAEW that it will take a sympathetic approach to taxpayers who submitted their tax returns late due to the recent disruption caused by storm Eowyn. 

Basis period reform

HMRC has confirmed that it will automatically accept that a taxpayer has a reasonable excuse for filing their tax return late, and will not charge the initial late-filing penalty, where the taxpayer requested details of overlap relief from HMRC and did not receive a response by 31 January 2025. 

HMRC says that, in this case, the taxpayer has until 28 February 2025 to file their tax return using provisional figures without incurring the penalty. The taxpayer should update their return when they get the correct figure. Any tax is still due by 31 January 2025 and interest will apply from 1 February 2025.

Public service pension schemes

In an earlier article, ICAEW provided a summary of HMRC’s guidance for taxpayers who did not have details of their pension input amount due to a delay by some public service pension schemes issuing pension savings statements. 

Further information

• Government press release: 11.5 million file Self Assessment by 31 January deadline
• ICAEW Tax News: Request overlap information from HMRC by 31 December