HMRC penalties overview
A summary of the main penalty regimes across Self Assessment, VAT, Corporation Tax, and PAYE.
RR AccountantsLast updated: 2025-01-155 min read
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: 2% at day 15, another 2% at day 30, 4% annual interest from day 31
- 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: £100, another £100 at 3 months, 10% of tax at 6 months, another 10% at 12 months
- 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