Historically, if you filed your tax return late any penalty could not exceed the tax liability. So if you had a zero tax liability, you would incur no late filing penalty. However, things have now changed and the penalty system has got very harsh.

What is a late tax return going to cost?

• From 1 day to 3 months there is an initial penalty of £100
• From 3 months late there is a daily penalty of £10, up to a maximum of £900
• From 6 months late there is an additional £300 or 5% of any tax outstanding, whichever is the higher amount
• From 1 year late there is a further £300 or 5% of any tax outstanding, whichever is the higher amount

As you can see, the minimum penalty for filing 6 months and 1 day late is £1,300 – even if all your tax due is paid on time or you are due a tax repayment.

What about late payments?

If you are late in settling your self-assessment liabilities a penalty of 5% of the unpaid tax will be added to your bill at 30 days, 6 months and 12 months. Additionally, interest will be due until the debt is cleared.

At Nimbus accounting our advice is quite simple, appoint a proactive accountant to help manage your deadlines and take care of filing your tax return.