New self-assessment penalties
New penalties for late filing and late payment of self-assessment income tax returns came into effect on 6 April 2011. The new penalties will apply to late 2010-11 and subsequent tax returns. The penalties increase the greater the delay in filing self-assessment returns or making payments due to HMRC.
The new rules will apply to:
- Taxpayers late sending back their tax return for 2010-11 or any later tax year.
- Taxpayers who pay the tax they owe for 2010-11 or a later year more than 30 days late.
Penalties for late filing:
- One day late: an initial penalty of £100, even if there is no tax to pay or all tax owed has been paid.
- Three months late: an automatic daily penalty of £10 a day up to a maximum of £900.
- Six months late: further penalties charged of the greater of 5% of tax due or £300.
- Twelve months late: the penalty will be the greater of 5% of tax due or £300. In serious cases, a higher penalty of up to 100% of the tax due could be charged.
Penalties for late payment:
- Thirty days late: An initial penalty of 5% of the tax unpaid at that date.
- Six months late: Further penalty of 5% of the tax that is still unpaid.
- Twelve months late: Further penalty of 5% of the tax that is still unpaid.
These penalties are in addition to the interest that will be charged on all outstanding amounts, including unpaid penalties until payment is received. Taxpayers may still appeal against any penalty incurred if they have a reasonable excuse for not complying on time.