UK filing penalties are automatic, escalating and, with narrow exceptions, not negotiable after the event. The computer issues them on the day after the deadline, and the amounts grow on a fixed schedule whether or not anyone at HMRC or Companies House has looked at your case. Understanding the schedule is the best argument for the deadline-first approach, because the cheapest penalty is the one that was never charged. This guide sets out every penalty a small business is likely to meet and the limited circumstances in which they can be removed.
Self Assessment: late return
The return is due online by 31 January after the tax year. One day late brings a £100 penalty regardless of whether any tax is due or has already been paid. From three months late, daily penalties of £10 run for up to 90 days, adding up to £900. At six months late a further penalty applies of the greater of £300 or 5% of the tax due. At twelve months late another of the same, which rises to 70% or 100% of the tax where HMRC can show the failure was deliberate or deliberate and concealed. A return twelve months late with £3,000 of tax owing therefore costs at least £1,600 in filing penalties alone.
Self Assessment: late payment
Separately from the return, tax paid late attracts interest from the due date at the Bank of England base rate plus 4%, and late-payment penalties of 5% of the unpaid tax at 30 days, a further 5% at six months and a further 5% at twelve months. Payments on account that are late attract interest but not the percentage penalties. A Time to Pay arrangement agreed with HMRC before the penalty dates stops the percentage penalties, though interest continues.
Corporation Tax return
The CT600 is due twelve months after the accounting period end. One day late is £100, rising to £200 at three months. A company that has been late three times in a row sees these fixed penalties rise to £500 and £1,000. At six months late HMRC adds 10% of the unpaid Corporation Tax, and at twelve months a further 10%. Corporation Tax itself is due nine months and one day after the period end, with interest from that date on any unpaid amount.
Companies House accounts
Accounts are due nine months after the accounting reference date for a private company. The civil penalty is £150 if up to one month late, £375 up to three months, £750 up to six months and £1,500 more than six months. Where the previous year's accounts were also filed late, the penalty for the current year is doubled. These penalties apply to dormant companies in exactly the same way. Persistent failure to file leads Companies House to begin compulsory strike-off, and directors of companies that fail to file can be prosecuted and disqualified.
Confirmation statement
There is no fixed financial penalty for a late confirmation statement, but failure to file is a criminal offence by the company and its officers, and Companies House responds with compulsory strike-off proceedings, which if not stopped dissolve the company and pass its assets to the Crown. The overdue flag is also visible on the public register to anyone checking the company.
VAT
VAT uses a points system since 2023. Each late return earns a point, and when a quarterly filer reaches four points a £200 penalty is charged, with a further £200 for each subsequent late return until a period of twelve months of on-time filing resets the count. Late payment attracts 3% of the unpaid VAT after 15 days, a further 3% after 30 days and 10% a year thereafter, plus interest from the due date. Nil and repayment returns still earn points if late.
PAYE and CIS
Late Full Payment Submissions attract monthly penalties from £100 for employers with up to nine employees, rising with headcount, though the first late submission in a tax year is excused. Late payment of PAYE attracts percentage penalties for repeated defaults in a year. CIS monthly returns filed late cost £100 immediately, £200 after two months, and then the greater of £300 or 5% of the deductions at six and twelve months.
Making Tax Digital for Income Tax
Those in MTD for Income Tax are on the points system described for VAT: a point per late quarterly update or final declaration, £200 at four points, with late payment penalised at 3%, 3% and 10% as for VAT.
Appeals: what works
HMRC will cancel a penalty where you had a reasonable excuse for the failure and you put it right without unreasonable delay once the excuse ended. Accepted excuses include the death of a close relative shortly before the deadline, an unexpected hospital stay or serious illness, a failure of HMRC's own online service, a fire or flood that destroyed records, and in some circumstances reliance on an adviser who was engaged in good time and failed. Not accepted are being too busy, finding the system difficult, not receiving a reminder, not having the money to pay, or relying on someone who never had the information.
A penalty that was charged correctly but seems disproportionate can sometimes be reduced on the basis of special circumstances, and penalties for careless errors on a return, as opposed to late filing, can be suspended on conditions. Companies House accepts appeals against late filing penalties only in exceptional circumstances, such as a disaster that made filing impossible, and does not accept that the accountant was late, that the reminder was not received, or that the company was dormant.
What to do if you are already late
File now. Every penalty tier is time-based, so the fastest route to the smallest penalty is to get the return in, and filing stops the clock on the next tier. Pay what you can, and if you cannot pay in full, contact HMRC for a Time to Pay arrangement before the next late-payment penalty date. Then consider whether a reasonable-excuse appeal has a genuine basis; if it does, make it within 30 days of the penalty notice, in writing, with evidence. Our late-return rescue at £179 includes drafting the appeal where the facts support one, and our penalty appeal service at £249 handles reviews and appeals of penalties already charged.
Use the penalty estimator to see what a given delay would cost, and the deadline finder to make sure it does not happen.
Two worked examples
A sole trader files her 2026/27 return on 15 June 2028, four and a half months after the 31 January 2028 deadline, with £2,400 of tax due and unpaid. Filing penalties: £100 initial, plus daily penalties of £10 from 1 May for 45 days, £450, a total of £550. Late-payment penalty: 5% of £2,400 at 30 days, £120, with interest from 31 January. Had she filed in September, six months late, a further £300 would have applied. Total cost of delay by June: around £720 on a £2,400 bill.
A company's accounts for the year to 31 March 2026 were due at Companies House by 31 December 2026 and were filed on 20 March 2027, under three months late: £375. The previous year's accounts were also late, so the penalty doubles to £750. The CT600 for the same year is due by 31 March 2027 and was filed with the accounts, on time, so no HMRC penalty, but the Corporation Tax was paid on 20 March rather than 1 January and carries interest for the intervening weeks.
Interest
Interest runs on all unpaid tax from the due date at the Bank of England base rate plus 4 percentage points, and is not a penalty, so it cannot be appealed. It applies to late Corporation Tax, late Self Assessment payments, late VAT and late PAYE alike, and continues to run during a Time to Pay arrangement. It is the one cost of lateness that a reasonable excuse does not remove.
Two worked examples
A sole trader files her 2026/27 return on 15 June 2028, four and a half months after the 31 January 2028 deadline, with £2,400 of tax due and unpaid. Filing penalties: £100 initial, plus daily penalties of £10 from 1 May for 45 days, £450, a total of £550. Late-payment penalty: 5% of £2,400 at 30 days, £120, with interest from 31 January. Had she filed in September, six months late, a further £300 would have applied. Total cost of delay by June: around £720 on a £2,400 bill.
A company's accounts for the year to 31 March 2026 were due at Companies House by 31 December 2026 and were filed on 20 March 2027, under three months late: £375. The previous year's accounts were also late, so the penalty doubles to £750. The CT600 for the same year is due by 31 March 2027 and was filed with the accounts, on time, so no HMRC penalty, but the Corporation Tax was paid on 20 March rather than 1 January and carries interest for the intervening weeks.
Interest
Interest runs on all unpaid tax from the due date at the Bank of England base rate plus 4 percentage points, and is not a penalty, so it cannot be appealed. It applies to late Corporation Tax, late Self Assessment payments, late VAT and late PAYE alike, and continues to run during a Time to Pay arrangement. It is the one cost of lateness that a reasonable excuse does not remove.
Two worked examples
A sole trader files her 2026/27 return on 15 June 2028, four and a half months after the 31 January 2028 deadline, with £2,400 of tax due and unpaid. Filing penalties: £100 initial, plus daily penalties of £10 from 1 May for 45 days, £450, a total of £550. Late-payment penalty: 5% of £2,400 at 30 days, £120, with interest from 31 January. Had she filed in September, six months late, a further £300 would have applied. Total cost of delay by June: around £720 on a £2,400 bill.
A company's accounts for the year to 31 March 2026 were due at Companies House by 31 December 2026 and were filed on 20 March 2027, under three months late: £375. The previous year's accounts were also late, so the penalty doubles to £750. The CT600 for the same year is due by 31 March 2027 and was filed with the accounts, on time, so no HMRC penalty, but the Corporation Tax was paid on 20 March rather than 1 January and carries interest for the intervening weeks.
Interest
Interest runs on all unpaid tax from the due date at the Bank of England base rate plus 4 percentage points, and is not a penalty, so it cannot be appealed. It applies to late Corporation Tax, late Self Assessment payments, late VAT and late PAYE alike, and continues to run during a Time to Pay arrangement. It is the one cost of lateness that a reasonable excuse does not remove.