What are the penalties for late payment of tax?
Answered 17 March 2026
Here is a comprehensive answer on the penalties for late payment of tax in the UK.
Penalties for Late Payment of Tax
What the law says
The statutory framework for late payment penalties is Schedule 56 to the Finance Act 2009 ("Sch 56 FA 2009"). A penalty is payable where a person fails to pay an amount of tax on or before the specified due date.
The penalty structure under Sch 56 FA 2009 is as follows:
| Trigger | Penalty |
|---|---|
| Tax unpaid 30 days after the due date | 5% of the unpaid tax at that point |
| Tax still unpaid 6 months after the due date | A further 5% of the tax outstanding at the 6-month point |
| Tax still unpaid 12 months after the due date | A further 5% of the tax outstanding at the 12-month point |
These penalties are charged in addition to interest for late payment.
For Self Assessment income tax, Schedule 56 FA 2009 came into force on 6 April 2011 in relation to amounts payable for the tax year 2010–11 or any subsequent tax year.
Worked example: If tax of £2,500 was due on 15 May 2011 but not paid until 20 November 2011, the total penalty would be £250, made up of:
- £125 (5% of £2,500) — more than 30 days late; and
- £125 (5% of £2,500) — more than 6 months late.
HMRC also has the ability to reduce a penalty under paragraph 9 of Sch 56 FA 2009, but only where there is a reasonable excuse or special circumstances.
HMRC guidance / practice
What the penalties apply to: Late payment penalties apply to balancing payments, determinations, amendments, and revenue assessments. They do not apply to interest, late filing penalties, or payments on account. However, any part of a payment on account that is outstanding at the balancing payment due date will be included in the amount subject to the late payment penalty.
Class 2 NICs: From the 2015–16 tax year, Class 2 NICs (where due) form part of the balancing payment on which late payment penalties are charged. Class 2 NICs are not included when calculating payments on account.
Penalty labels on statements of account:
- 30-day penalty: shown as "30 days late payment penalty for yy/yy"
- 6-month penalty: shown as "six months late payment penalty for yy/yy"
- 12-month penalty: shown as "12 months late payment penalty for yy/yy"
Different taxes: The penalties regime differs by tax type. HMRC guidance covers Self Assessment, PAYE and NIC, VAT, Corporation Tax, Capital Gains Tax on property disposals, CIS, and Stamp Duty Reserve Tax separately.
Reasonable excuse and special reduction: HMRC has discretion to reduce a penalty, but this can only be done where there is a reasonable excuse or special circumstances. The following will not be considered "special circumstances": the inability of the scheme administrator to pay; the fact that the loss of tax from one taxpayer is balanced by tax from another taxpayer. Special reduction can only be considered if there was no reasonable excuse for the failure to pay on time.
Note: VAT late payment penalties for accounting periods starting on or after 1 January 2023 operate under a different regime (Schedule 26 to the Finance Act 2021), not Schedule 56 FA 2009. If you need details on VAT-specific or PAYE-specific penalties, please ask.
Citation sources
SA370 notes provide guidance to customers on what is likely to be accepted as a valid reasonable excuse. More information about reasonable excuse can be found at SAM10090. In law, the customer is not required to pay a late payment penalty before an appeal against the assessment of the penalty is determined so you should informally stand over the penalty immediately the appeal is logged. Note: The fact that a penalty is informally stood over will not stop other penalties being automatically charg
Penalties are charged for late Stamp Duty Reserve Tax (SDRT) notifications (Schedule 55 FA2009, for notifications due on or after 1 September 2014), and for late payment (Schedule 56 FA2009, from 1 January 2015). Information on SDRT late notification and payment penalties is available: on gov.uk and in the Compliance Handbook for: late notification and late payment penalties
Late payment penalties are imposed when tax and NIC liabilities (referred to throughout as tax) are paid late. These penalties are applied to balancing payments, determinations, amendments and revenue assessments but not interest, late filing penalties or payments on account. The balancing payment liable to late payment penalty will include any part of a payment on account outstanding at the balancing payment due date. From the 2015-2016 tax year, Class 2 NICs, where they are due, will form part
Schedule 56 Finance Act 2009 The Finance Act 2009, Schedule 56 (Appointed Day and Consequential Provisions) Order 2010 - Statutory Instrument 2010/466 Penalties are due for late payment of tax charges listed above due on or after 14 October 2010. That is tax charges that arise in the quarter ending 30 September 2010 and any subsequent quarter. Penalties for late payment do not kick in until the tax payment is over 30 days late. Penalties are due in addition to interest for late payment. Where th
Citation, commencement and interpretation 1 1 This Order may be cited as the Finance Act 2009, Schedules 55 and 56 (Income Tax Self Assessment and Pension Schemes) (Appointed Days and Consequential and Savings Provisions) Order 2011 and comes into force on 1st April 2011. 2 In this Order “return period” means each period of three months ending with 31st March, 30th June, 30th September or 31st December for which a return must be made under section 254(2) of the Finance Act 2004 (pension schemes;
Penalties for late filing of returns and paperwork or late payment differ according to which tax you are dealing with. Self Assessment tax return deadlines and penalties What counts as reasonable excuse when an online tax return is filed late PAYE and National Insurance late payment penalties PAYE penalties for late and inaccurate returns Missed VAT deadlines for accounting periods starting on or after 1 January 2023 Missed VAT deadlines for accounting periods starting on or before 31 December 2
n amount of £124; and (b) a 6-month late payment penalty in an amount of £124, was served on Mr Bezant by way of electronic notification to Mr Bezant’s online tax account. At the same time, email alerts were sent to Mr Bezant’s verified email address. 10. On 6 September 2023, Mr Bezant appealed the penalties to HMRC. HMRC issued a late appeal refusal letter on 22 September 2023. They subsequently identified that an incorrect late appeal refusal letter had been issued and wrote again to Mr Bezant