Self-Assessment and January (Penalties)

A critical date in the calendar each year for those working in the field of personal taxation is January 31, when self-assessment tax returns and tax payments must be submitted. Many clients delay sending their documents to agents until the last minute.

However, despite all efforts, some will not be able to submit their returns and required payments on time. What happens next? What other options are available?

Penalties

There are fixed penalties for:

• Late submission of tax returns,
• Late payment of tax,
• Failure to notify initially and for subsequent errors in tax returns.

If the tax return is not submitted by January 31, a £100 penalty is charged. If the return is not submitted within the next three months, a £10 per day penalty is applied for the next 90 days. If the return is six months overdue, an additional penalty of £300 or 5% of the unpaid tax (whichever is greater) is imposed. The same applies again after a 12-month delay.

There are separate penalties for non-payment of tax:

• After 30 days of non-payment following January 31, a 5% penalty is charged.
• After six months, another 5% penalty is applied.
• After 12 months, an additional 5% penalty is imposed.

An important aspect to consider with late payments is that, in addition to penalties, interest will accrue until the debt is paid. The current annual interest rate (as of November 26, 2024) on overdue income tax and capital gains tax is 7.25%.

Once the Making Tax Digital system for income tax is introduced in 2026–2027, a new points-based penalty systemwill apply—similar to what was introduced for VAT in January 2023.