Late filing penalty

If you file your tax return late, HMRC will charge you a late filing penalty. The penalty is different depending on whether you’re a sole trader or a limited corporation.

The late filing penalty as a sole trader

When it comes to paying your Self Assessment tax return, there are a few things to keep in mind:

● There is a separate penalty for failing to register as self-employed and failing to pay your tax bill on time, and both are added together.
● When you pay late, you will be charged interest.
● Even if you don’t owe any taxes, you’ll be charged if you file late for another reason.

Deadlines to keep in mind

Here are the deadlines that you should put in your calendar as a sole trader to stay on top of ways when it comes to paying your taxes:

● The tax year spans from April 6th to April 5 of the following year.
● The deadline for filing tax returns is January 31 after the tax year-end.
● The deadline for paying the second installment of income tax on the account is July 31.
● The self-Assessment registration deadline is October 5.

What are the late tax return penalties?

The penalties have changed as of April 6th, 2012. (Before this date, various penalties were enforced)

One day late

A fixed penalty of £100. Even if you don’t have any tax liability, you will be fined if you file your return one day late.

Three months late 

£10 every day for the next 90 days, up to £900. It is on top of the £100 fixed penalty mentioned above.

Six months late 

A fixed sum of £300 or 5% of the tax due, whichever is greater. It is in addition to the previous penalties.

12 months late

Another fixed sum of £300 or 5% of the tax due, whichever is greater. In extreme instances, you may be required to pay up to 100% of the tax payable. These are in addition to the penalties listed above.

In other words, if you’re a year late with your tax return, you could owe HMRC £1,600!