As the New Year kicks off, many UK workers could be at risk of incurring a fine of £300 or more. HM Revenue and Customs (HMRC) may start issuing these fines before employees have even had a chance to fully embrace the New Year.

The government department has previously cautioned that anyone required to complete a Self Assessment must pay the tax they owe by 11.59pm on January 31, 2026 at the latest. This deadline strictly pertains to individuals who need to file an online tax return, as opposed to a paper one which should have been submitted by October 31 last year.

If you have not already submitted your paper returns when required, you will already be subject to late filing penalties. Remember, you must submit a Self Assessment tax return if you were categorised as a self-employed ‘sole trader’ who earned over £1,000 in the previous tax year, had to pay Capital Gains Tax when selling or disposing of something that appreciated in value, or were a partner in a business partnership.

You might also need to submit a return if you had to pay the High Income Child Benefit Charge and do not pay it through PAYE, or have an untaxed income, which can encompass foreign income, tips and commissions, and money from renting out a property. You can verify if you need to submit a tax return here.

Penalties for missing the self assessment deadline

HMRC has the authority to levy financial penalties for any late tax returns. Beginning with a fixed £100 charge, this can rapidly escalate if not addressed.

If your tax return is not submitted within three months of the deadline, you will face additional penalties of £10 per day, up to a maximum of £900. After six months, this penalty rises to either five per cent of the tax owed or £300, whichever is greater.

After a year, an extra charge of 5% or £300 will be added – again, whichever is the larger sum. HMRC stresses that these penalties can be easily avoided by simply submitting your Self Assessment tax return promptly.

Those who fail to pay their tax on time will initially be charged 5% of the unpaid tax 30 days after the due date. This penalty will then increase by an additional 5% if the payment is six months and 12 months late, respectively. HMRC has also highlighted that interest will be charged on any outstanding tax owed.

What happens if I receive a penalty?

If you are slapped with a penalty by HMRC for either a late tax return or a late payment, you might be able to dodge paying it if you challenge the decision. According to HMRC guidelines, one valid reason for disputing the penalty is if you have a ‘reasonable excuse’.

Typically, you have 30 days from the date the penalty is issued to contact HMRC and formally lodge an appeal. If a deadline was missed, you’ll need to provide a reason for the delay.

The process of lodging an appeal will differ greatly depending on the type of tax you pay and whether you’re employed or self-employed. Full details can be found here.