Households across the UK, including the West Midlands, are being warned they could face daily penalties of up to £900 from HM Revenue and Customs (HMRC) for failing to meet a crucial tax deadline. The so-called 'three month rule' triggers severe financial penalties for those who miss the Self Assessment filing date.
The Looming January Deadline and Escalating Penalties
The government department has issued a stark reminder that the final deadline for filing and paying Self Assessment tax returns for the 2024 to 2025 tax year is 11.59pm on January 31, 2026. While over six million people have already filed, a significant 5.65 million individuals are yet to submit their returns.
Missing the January 31 cutoff incurs an immediate £100 late filing penalty, applicable even if no tax is owed. However, the financial consequences become far more severe if the delay continues.
How the 'Three Month Rule' and Further Penalties Work
If a tax return remains unfiled three months after the deadline, HMRC begins issuing additional daily penalties of £10 per day. These can accumulate to a maximum of £900.
The penalties continue to rise sharply thereafter:
- After six months: A further penalty of 5% of the tax due or £300, whichever is higher.
- After 12 months: Another 5% or £300 charge is added.
Separately, late tax payments also attract penalties of 5% of the unpaid tax at 30 days, six months, and 12 months. On top of all penalties, interest will be charged on any tax paid late.
Reasonable Excuses and Payment Support Options
HMRC has stated it will consider reasonable excuses for missing the deadline on an individual basis. Valid reasons may include:
- The recent death of a partner or close relative.
- An unexpected hospital stay or serious illness.
- Critical computer failure during online preparation.
- Service issues with HMRC's online services or unexpected postal delays.
- Delays related to a disability.
However, you cannot use a lack of reminder from HMRC or a bounced payment as an excuse. The return or payment must be submitted as soon as the excuse is resolved.
For those struggling to pay, HMRC urges using its online 'Time to Pay' arrangement to spread the cost. This service is available for bills under £30,000 without needing to contact HMRC directly. Those owing more must contact the department. Crucially, you must file your return before setting up a payment plan.
Myrtle Lloyd, HMRC’s Chief Customer Officer, advised: “New Year is a great time to start afresh. What better way than to ensure your tax affairs are in order for another year than completing your tax return. If you have yet to start, the clock is ticking, go to GOV.UK and start today.”
