HMRC has begun issuing £100 late filing penalties to households that missed the 31 July deadline for the second self assessment payment on account. Taxpayers who were due to make personal tax payments on account for the current tax year were required to pay the second instalment by midnight on 31 July, following the end of the tax year.
What Are Payments on Account?
Payments on account are advance payments towards a customer’s next self assessment tax bill, designed to spread the cost of tax owed in two instalments. Each payment equals half of the tax the customer owed in the previous tax year. These payments are due by midnight on 31 January and 31 July respectively, with the July payment being the second of the two.
If a taxpayer believes their tax liability for the current year will be lower than the prior year, HMRC advises completing the tax return before 31 July. This allows the final tax liability to be confirmed, preventing overpayment on the second payment on account.
Late Filing Penalties Explained
The late filing penalty regime starts with an immediate £100 charge. After three months, additional daily penalties of £10 per day are added, up to a maximum of £900. Six months after the deadline, a further penalty of 5% of the tax due or £300 – whichever is greater – is applied. After twelve months, another 5% or £300 charge, again whichever is greater, is added. These penalties can quickly accumulate, turning a modest tax bill into a significant financial burden.
According to HMRC, the only way to avoid these charges is to send the self assessment tax return as soon as possible. The longer a taxpayer waits, the more severe the penalties become. For those who have missed the July deadline, acting immediately is critical to limit the damage.
How to Pay and Avoid Further Fines
Payments can be made through the HMRC app, which has been used by nearly 2 million self assessment taxpayers since its introduction in January 2022. The app allows users to pay towards their tax bill, set payment reminders, and track and view their payment history. This digital option is part of HMRC’s broader effort to make tax management more accessible.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said: "We know managing a Self Assessment tax bill isn’t always straightforward and we are here to help. From paying instantly via the HMRC app to spreading the cost through a payment plan, there’s support available for every customer."
HMRC also directs taxpayers to search ‘Pay your Self Assessment tax bill’ on GOV.UK to choose the payment option that works for them. This could include setting up a payment plan to spread the cost of any outstanding tax, interest, and penalties.
Impact on Households
For many households, the £100 fine represents an unexpected financial strain, especially when combined with the second payment on account itself. The additional daily penalties highlight the importance of promptly submitting a tax return, even if the tax owed cannot be paid in full immediately. HMRC’s payment plans can help mitigate the total cost, but they do not waive the late filing penalties.
The self assessment system affects a wide range of taxpayers, including self-employed individuals, landlords, and those with income from savings or investments. Missing the July deadline can have a knock-on effect on next January’s payment on account, as HMRC calculates the next instalments based on the most recent figures.
To ensure compliance and avoid further escalation, taxpayers who missed the deadline are urged to file their return without delay. The HMRC app and online services remain available around the clock, allowing taxpayers to meet their obligations even after the official deadline has passed.
