HMRC penalties overview
A summary of the main penalty regimes across Self Assessment, VAT, Corporation Tax, and PAYE.
Penalty regimes are not the same
UK tax has separate penalty regimes for each tax (Self Assessment, VAT, Corporation Tax, PAYE), and the rules differ. This guide summarises each one so you know what to expect.
Self Assessment
- Late filing: £100 immediate, £10/day after 3 months (max £900), 5% or £300 at 6 and 12 months
- Late payment: daily interest from day 1 + 5% surcharges at 30 days, 6 months, 12 months
- Inaccuracy: 0-100% of tax owed depending on behaviour and disclosure
VAT (since January 2023)
- Late filing: points-based system: 1 point per late return, £200 once at threshold (4 for quarterly)
- Late payment: no first or second penalty up to day 15; from day 16, 3% of VAT unpaid at day 15; from day 31, a further 3% of what is still unpaid at day 30 plus a daily 10% annual-rate second penalty
- Inaccuracy: same 0-100% framework as Self Assessment
Corporation Tax
- Late accounts at Companies House: £150, £375, £750, £1,500, doubled if late two years running
- Late CT600 at HMRC: £200, another £200 at 3 months, 10% of unpaid tax at 6 months, another 10% at 12 months; the £200 penalties rise to £1,000 each if late 3 times in a row
- Late payment: daily interest only, no separate fixed penalty
PAYE
- Late FPS: escalating monthly penalties for repeat defaults
- Late payment: 1% to 4% based on number of defaults in the year, plus 5% if still unpaid 6 months later
Inaccuracy penalties (apply to all taxes)
If your return is wrong and tax was underpaid, HMRC categorises the error and applies a penalty as a percentage of the under-declared tax:
- Reasonable care: no penalty (you took care, the mistake was honest)
- Careless: 0-30%
- Deliberate: 20-70%
- Deliberate and concealed: 30-100%
The exact percentage depends on whether you disclosed the error before HMRC found it (disclosed errors get a much lower penalty than discovered ones).
Common protective measures
- File on time even if you can't pay: late filing and late payment are penalised separately
- If you spot an error in a past return, disclose it before HMRC asks: it slashes the penalty
- Set up Time to Pay before the deadline if you can't pay in full
- Keep records that support every figure on every return
- Appeal within 30 days if you have a reasonable excuse
Frequently asked questions
Can HMRC take money directly from my bank account?
In some cases, yes. Under its Direct Recovery of Debts power, HMRC can collect a tax debt directly from bank and building society accounts. GOV.UK says that in England, Wales and Northern Ireland it can do this when you owe £1,000 or more and have enough in your accounts to cover the debt and your reasonable living costs. In Scotland a different route, a summary warrant, is used. HMRC says it uses enforcement powers as a last resort and, except where it suspects fraud or criminal activity, will try to contact you and agree a way forward first. Customers HMRC identifies as vulnerable are not considered for direct recovery. If you cannot pay in full, contact HMRC early and ask about a Time to Pay arrangement.