HMRC Self Assessment Penalties and Late Payment Interest in 2026

Overview: The Self Assessment Penalty System

HMRC operates a structured penalty regime for Self Assessment taxpayers who miss filing or payment deadlines. The system works on two tracks simultaneously:

1. Late filing penalties — charged for not submitting your tax return on time
2. Late payment penalties and interest — charged for not paying the tax you owe on time

These can run concurrently. If you both file late and pay late, you may be facing penalties from both categories at once. Understanding the exact schedule is essential — particularly if you have missed a deadline and are considering whether to act now or wait.

Key Self Assessment Deadlines

All references to "the 31 January deadline" in this article refer to the online filing and payment deadline, which is the most relevant for the majority of Self Assessment taxpayers.

Late Filing Penalties

Immediate: £100 Fixed Penalty

If you miss the 31 January online filing deadline, HMRC automatically charges a £100 fixed penalty from the very first day of lateness — even if:

• Your return shows no tax owed
• You have already paid all the tax you owe
• You were unaware you needed to file

This penalty is levied regardless of the tax position. It exists to enforce timely compliance.

After 3 Months: Daily Penalties

Once your return is 3 months late (i.e., after 1 May for an online return due 31 January), HMRC can charge £10 per day for each subsequent day the return remains outstanding. These daily penalties continue for up to 90 days, giving a maximum additional charge of £900.

HMRC does not automatically levy daily penalties in every case — they typically issue a notice first. However, you should not rely on this. If you receive a daily penalty notice and believe you have filed, check your Government Gateway submissions for confirmation.

After 6 Months: 5% Surcharge

Once your return is 6 months late (after 31 July), a further penalty applies: the greater of 5% of the tax due, or £300. This surcharge is in addition to all previous penalties.

Example: Tax owed of £4,000, return filed 8 months late:

• £100 fixed penalty
• £900 (90 × £10 daily penalty)
• £300 (greater of 5% × £4,000 = £200, or £300 flat)
• Total late filing penalties: £1,300 — before any late payment charges

After 12 Months: Further 5% Surcharge

If the return is still not filed after 12 months (after 31 January of the following year), a further 5% surcharge (or £300, whichever is greater) is charged. In exceptional cases where HMRC believes you have deliberately withheld information, penalties can rise to 70% or even 100% of the tax owed.

Summary: Late Filing Penalty Schedule

Late Payment Penalties and Interest

Late payment of tax triggers both a penalty surcharge and ongoing interest.

Late Payment Penalties

So if you have £5,000 of tax unpaid at 6 months and 1 day after the deadline:

• 30-day surcharge: 5% × £5,000 = £250
• 6-month surcharge: further 5% × £5,000 = £250
• Total surcharge: £500 (plus interest accruing throughout)

Late Payment Interest Rate in 2026

HMRC's late payment interest rate is calculated as the Bank of England base rate plus 2.5 percentage points. As of June 2026, with the Bank of England base rate at approximately 4.25%, the current late payment interest rate is approximately 6.75% per annum.

This rate changes whenever the Bank of England adjusts the base rate, with HMRC typically updating its rate within a few weeks. Interest accrues from the day after the payment deadline (1 February for the 31 January payment) until the date HMRC receives full payment.

Example: Underpaid tax of £8,000, paid 9 months late (i.e., on 31 October):

• Interest: £8,000 × 6.75% × (9/12) = £405
• 30-day surcharge: 5% × £8,000 = £400
• 6-month surcharge: further 5% × £8,000 = £400
• Total additional charges: £1,205 beyond the original tax

HMRC's Repayment Interest

If HMRC owes you a repayment (you have overpaid tax), HMRC pays interest at a lower rate: base rate minus 1% (with a floor of 0.5%). This asymmetry is intentional — HMRC's late payment interest rate is deliberately higher than the repayment rate.

Payments on Account and Late Payment

Payments on account (two interim tax payments due in January and July, each equal to 50% of the prior year's tax bill) also accrue interest if paid late. The July payment on account must be paid by 31 July — missing this deadline starts interest accruing from 1 August.

Note that payments on account do not attract the 5% surcharge penalties that the final balancing payment does. Interest is the only charge for a late payment on account (until the full year's tax position is settled in January).

How to Appeal a Self Assessment Penalty

If you receive a penalty notice and believe you have a valid reason, you can appeal. The process is:

Step 1: Act Within 30 Days

You must appeal within 30 days of the date on the penalty notice. Missing this window significantly reduces your chances of success, though HMRC can accept late appeals in exceptional circumstances.

Step 2: Submit Your Appeal

You can appeal:

• Online: via your Government Gateway / Personal Tax Account
• By post: using form SA370 or writing to the address on the penalty notice
• By phone: call 0300 200 3300 (though HMRC recommends written appeals to ensure a clear record)

Step 3: State Your Reasonable Excuse

Your appeal must set out the reasonable excuse for the late filing or payment. HMRC's published list of accepted reasonable excuses includes:

• Serious or unexpected illness (you or a close family member)
• Bereavement of a close family member close to the deadline
• Unexpected hospital admission or stay
• Domestic emergency beyond your control
• Severe flooding, fire, or other natural disaster affecting your records
• HMRC's own computer systems failing
• You sent the return on time but it was delayed or lost in post

What Is NOT a Reasonable Excuse

HMRC explicitly does not accept the following:

• Pressure of work or an unusually busy period
• Not knowing the deadline existed
• Reliance on an accountant who missed the deadline on your behalf (this is one of the most common misconceptions — you remain personally responsible)
• Inability to pay the tax owed (the filing and payment obligations are separate — you can file even if you cannot pay, reducing the penalty exposure)
• Waiting for HMRC to send you a paper return
• Misunderstanding the Self Assessment rules

Step 4: If Your Appeal Is Rejected

If HMRC rejects your appeal, you can:

1. Request an internal review by a different HMRC officer
2. Take the matter to the Tax Tribunal (First-tier Tribunal) — this is the independent appeals body and HMRC's decision is not final

Tribunal appeals must be lodged within 30 days of HMRC's review decision. Tribunal proceedings are relatively informal and a high proportion of reasonable-excuse appeals that go to tribunal are decided in the taxpayer's favour where the facts support the claim.

Filing a Nil Return to Stop Penalties

If you owe no tax but need to stop penalties accumulating while you gather all the information needed for a complete return, consider submitting a best estimate return rather than waiting. HMRC allows amendment of a submitted return within 12 months of the filing deadline, so filing an approximate return now stops the late filing penalties immediately and can be corrected later.

Practical Steps If You Have Already Missed the Deadline

1. File as soon as possible — every day of delay adds to the penalty risk
2. Pay any tax you can — partial payment reduces the interest and penalty base; paying something is always better than paying nothing
3. Contact HMRC if you have a genuine reasonable excuse — proactively contacting HMRC before they issue a penalty is viewed more favourably than waiting to appeal after the fact
4. Consider a Time to Pay arrangement — if you cannot pay the full amount, HMRC offers instalment arrangements via its Self Assessment helpline. Once a Time to Pay agreement is in place, late payment penalties are suspended for the agreed period

Summary

The Self Assessment penalty regime is structured and predictable — which means there are no surprises if you know the rules. The £100 fixed penalty is unavoidable once you cross 31 January, but the daily penalties and surcharges that follow only apply if you continue to delay. Filing quickly, even if you cannot pay immediately, is always the right move. If you have a genuine reasonable excuse, act within 30 days of receiving the penalty notice and document everything clearly. HMRC's appeals process is more accessible and reasonable than many taxpayers assume.