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June 11, 2025📅 Understanding Self-Assessment Penalties: What You Need to Know
Filing a Self-Assessment tax return late or incorrectly can lead to some costly penalties from HMRC. Whether you’re newly self-employed or a seasoned sole trader, understanding the rules around Self-Assessment penalties is vital to avoid unnecessary fines. Let’s break it down.
🚨 What Triggers a Self-Assessment Penalty?
HMRC can issue penalties for:
- Missing the tax return deadline (usually 31 January)
- Paying your tax bill late
- Filing an incorrect return (if it’s due to carelessness or deliberate error)
- Failing to notify HMRC that you need to submit a return
📌 Late Filing Penalties
Here’s what happens if you file your return after the deadline:
| Delay | Penalty |
|---|---|
| 1 day late | £100 fixed penalty |
| 3 months late | £10 per day (up to 90 days = £900) |
| 6 months late | 5% of the tax due or £300 (whichever is more) |
| 12 months late | Another 5% or £300 (can increase for deliberate evasion) |
So being just one day late will cost you £100 – and the penalties escalate fast.
💰 Late Payment Penalties
Paying your tax late also comes at a cost:
- 30 days late – 5% of unpaid tax
- 6 months late – additional 5%
- 12 months late – another 5%
Interest also builds up daily on the amount owed, so delaying payment can quickly become expensive.
⚠️ Errors on Your Tax Return
Mistakes happen – but HMRC may penalise you based on whether the error was:
- Careless
- Deliberate
- Deliberate and concealed
The penalties vary from 0% to 100% of the extra tax due, depending on the nature of the error and whether you disclosed it voluntarily.
📞 Reasonable Excuse – Can You Appeal?
Yes. If you have a reasonable excuse (e.g., serious illness, bereavement, IT failure), you may be able to appeal the penalty. HMRC reviews appeals on a case-by-case basis.
✅ Top Tips to Avoid Penalties
- Register early if you’re newly self-employed.
- Keep accurate records throughout the year.
- Submit your return early – don’t wait for January.
- Set reminders for payment deadlines.
- Get help from a qualified accountant or tax advisor.
👋 Need Support?
At Taxes Done Right Ltd, we help individuals stay compliant, avoid penalties, and file their returns with confidence. Don’t let deadlines stress you out – we’ve got your back.
