The Self Assessment late payment penalty explained

Would you rather someone else handled this? Our Self Assessment service means we prepare, check and file your tax return with HMRC on a fixed fee.

What late payment costs

1. Interest from 1 February. Charged daily on anything unpaid after the deadline.
2. 30 days late. A 5% surcharge on the tax still outstanding.
3. 6 months late. A further 5% surcharge.
4. 12 months late. Another 5% surcharge on top.

If you cannot pay in full

Do not simply miss the payment. A Time to Pay arrangement lets you spread the bill over monthly instalments, and setting one up before or soon after the deadline usually stops the surcharges building, though interest still applies. The key is to act rather than ignore it.

What late payment costs, stage by stage

Late payment and late filing are separate penalties with separate rules. You can be charged both for the same year.

On an ordinary Self Assessment bill the scale is:

• 30 days late: 5% of the tax still unpaid
• 6 months late: a further 5%
• 12 months late: a further 5%

Interest runs alongside all of it from the due date. The current late payment rate is 7.75%, set at the Bank of England base rate plus 4 percentage points and in force since 9 January 2026. Interest is not a penalty and cannot be appealed on reasonable excuse grounds, so it accrues regardless.

On a £10,000 bill left unpaid for a year, that is £1,500 in penalties plus roughly £775 of interest.

Making Tax Digital changes the shape of it

If you are in Making Tax Digital for Income Tax, the timing is tighter but the early charges are smaller. For 2026/27:

• Nothing at all if you pay within 15 days.
• 3% of the amount outstanding at day 15.
• A further 3% of the amount outstanding at day 30.
• From day 31, a second penalty accruing daily at 10% a year until it is paid.

In your first year in Making Tax Digital you get 30 days rather than 15 to pay or agree a payment plan before anything is charged. From 2027/28 the first two charges rise from 3% to 4%.

One useful detail: late payment penalties do not apply to payments on account. Interest still does, but the percentage penalties do not.

Time to Pay, which is the answer most of the time

If you cannot pay, the single most valuable thing you can do is agree a Time to Pay arrangement with HMRC. Agreeing one, or even proposing one, within the relevant window stops the penalty clock. Interest still runs, but the 5% charges do not land.

You can often set this up online without speaking to anyone if you owe under £30,000, are within 60 days of the deadline and have filed the return. Above that, or outside those conditions, you ring HMRC and talk it through.

Two things make the call go well: file the return first so HMRC can see the actual figure, and go in with a realistic monthly amount you can genuinely sustain. A defaulted arrangement is worse than a cautious one.

Payments on account, and why January is brutal

If your bill comes to more than £1,000, you also make payments on account towards the following year, half on 31 January and half on 31 July. In a first profitable year that means January carries the balancing payment for the year just ended plus the first payment on account for the year you are in, which can be about one and a half times the tax you expected.

You are outside payments on account if last year's bill was under £1,000, or if more than 80% of your tax was already collected at source through PAYE.

If your income has genuinely fallen you can apply to reduce them, but be careful. Reduce them too far and HMRC charges interest on the shortfall from the original due dates.

What we would do

Pay something rather than nothing. Penalties are calculated on the amount still outstanding at each trigger date, so a part payment before day 30 reduces every charge that follows. And if the money genuinely is not there, ring HMRC before the deadline rather than after. The arrangement is much easier to get while the debt is still current.

Frequently asked questions