What happens if I miss my Self Assessment payment on account deadline?

Full answer

Payments on account that are not paid on time do not attract the same fixed penalties as a late tax return, but they are far from cost-free, and ignoring them can escalate quickly. **Interest, not an automatic penalty** From the day after the due date (1 February or 1 August), HMRC charges late payment interest on the outstanding amount, compounding daily at HMRC's official rate (which is linked to the Bank of England base rate plus a margin and can change during the year). This applies automatically and continues to accrue until the debt is paid in full -- there is no grace period. **Why there is no £100 penalty for late payments on account specifically** The well-known £100 automatic penalty applies to a LATE RETURN, not a late payment on account -- since no tax return is due on 31 July, missing that date alone does not trigger the £100 penalty. However, if you also miss the 31 January deadline for filing your return and paying any balancing amount, the separate late-filing and late-payment penalty regime for that date does apply. **Escalation if you keep ignoring it** If a payment on account remains unpaid for an extended period, HMRC can eventually pursue the debt through its debt management processes, which can include contacting you directly, referring the debt to a debt collection agency, or in serious or prolonged cases, court action or use of enforcement powers to recover the money -- though this typically follows a period of reminders and opportunities to arrange payment first. **Time to Pay arrangements** If you cannot pay a payment on account in full by the deadline, contact HMRC as early as possible (ideally before the deadline) to discuss a Time to Pay arrangement, spreading the debt over instalments. Many self-employed taxpayers can set this up online for debts under a certain threshold without speaking to an adviser. Interest still accrues on the outstanding balance during a Time to Pay arrangement, but agreeing one proactively generally avoids more aggressive enforcement action and shows HMRC you are engaging responsibly. **Worked example** Fatima misses her £2,500 payment on account due 31 July. She pays it 45 days late, on 14 September. HMRC charges interest for those 45 days at the prevailing late payment rate on the £2,500 outstanding -- a relatively modest but entirely avoidable cost. Had she instead ignored it for six months, the interest would have compounded for much longer, and HMRC may also have begun debt recovery contact. **Practical tip** If you genuinely cannot pay, act before the deadline rather than after -- contacting HMRC in advance to arrange reduced payments on account (if your income has fallen) or a Time to Pay plan (if it has not, but cash flow is tight) is always better than silence.

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