These days HMRC is taking a tougher line where self-assessment payments are paid late. What penalties can you expect if you don’t pay on time and is there a way to avoid them if you can’t afford to pay?


For most people who haven’t submitted their 2013/14 self-assessment tax return, the main focus is on getting the job done by no later than midnight on 31 January 2015. However this is also the deadline for paying any tax you owe without incurring an extra cost.

If you don’t pay

If any of the amount due to HMRC on 31 January 2015 isn’t paid they will charge you interest at 3% per annum until you settle what’s owing. That’s not too bad bearing in mind what the banks charge these days. Apart from receiveing warnings from HMRC in the form of red demands and possibly even a threatening phone call that’s the worst that will happen until 1 March 2015.

Extra penalty

The 2013/14 amount which remains unpaid after 28 February 2015 will be liable to a flat rate penalty of 5%. However, not everything due on 31 January 2015 but unpaid by 28 February 2015 is necessarily liable to a penalty. It’s only the amount for 2013/14 that it applies to. If your original 2013/14 bill was for more than £1,000, HMRC’s demand will include a sum on account for 2014/15 equal to half the 2013/14 amount so the 5% doesn’t apply to this figure.

Tip: If you make a payment against 2013/14, but still owe tax for earlier years, be sure to notify HMRC (by phone will do, but keep a record of the call, including date, time and name of the officer) that you want the payment allocated against that year so it reduces any possible penalty.

Note: Where you amend a tax return you’ve already submitted, the payment date for any additional tax is 30 days from the date of the amendment, which can take it beyond 31 January. For example, where you submitted your return on 20 November 2014 and amended it on 15 January 2015, the payment date would be 13 February 2015.

Not my fault

If you pay late, but have reasonable excuse, HMRC will let you off the penalty but not the interest. The bar is set pretty high so your reason for not paying has to be a good one, e.g. an illness so bad that you were unable to arrange a payment. HMRC gives some guidance and past tribunal rulings provide some helpful examples of what might be acceptable.

Act early

If you don’t have an excuse that will get you off the hook, all is not lost. By concession HMRC allows some leeway, but only if you act promptly.

Tip: If you can’t pay some or all of the tax due for 2013/14 by 31 January 2015, contact HMRC’s Business Payment Support Service on 0300 200 3535 within 14 days and explain your circumstances. If you can agree a payment schedule, the penalty won’t be charged. However where you agree a payment schedule make sure you stick to it otherwise HMRC will reinstate the penalty.