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If you’re a freelancer, contractor or small business working as a sole trader or limited company in the UK, it’s vital you stay on top of the deadlines for your tax filings, as well as the various tax rates and thresholds.
If you miss filing or payment deadlines imposed by HMRC or Companies House you will face various on-the-spot penalties or tiered fines based on the degree of lateness.
HMRC issue two types of Self Assessment penalties – those for late filing, and for late payment of owed tax. Both increase over time.
|Missed deadline||£100 penalty|
|3 months late||£10 daily penalty for up to 90 days|
|6 months late||5% of tax due or £300 (whichever is greater)|
|12 months late||5% of tax due or £300 (whichever is greater)|
Additional penalties may be applied if HMRC believe the taxpayer is intentionally withholding information or trying to evade tax.
|30 days late||5% of tax due|
|6 months late||5% of tax due at that date|
|12 months||5% of tax due at that date|
For VAT registered businesses HMRC issue increasingly strict penalties if you miss multiple returns.
|Missed payments within 12 months||Penalty if annual turnover is less than £150,000||Penalty if annual turnover is £150,000 or more|
|2||None||2% (None if less than £400)|
|3||2% (None if less than £400)||5% (None if less than £400)|
|4||5% (None if less than £400)||10% or £30 (whichever is greater)|
|5||10% or £30 (whichever is greater)||15% or £30 (whichever is greater)|
|6 or more||15% or £30 (whichever is greater)||15% or £30 (whichever is greater)|
As with Self Assessments, Corporation Tax penalties are issued both for late filing and late payment, and increase over time.
|1 day late||£100 penalty|
|3 months late||£100 penalty|
|6 months||10% penalty added to estimated tax bill|
|12 months||10% penalty added to estimated tax bill|
|Any overdue payment||3% penalty|
If you are a contractor working under the CIS, you will face additional penalties if you miss the date for your CIS return.
|1 day late||£100 penalty|
|2 months late||£200 penalty|
|6 months late||£300 penalty or 5% of CIS deductions (whichever is greater)|
|12 months late||£300 penalty or 5% of CIS deductions (whichever is greater)|
|Limited Company||Public Limited Company|
|Up to 1 month||£150||£750|
|Up to 3 months||£375||£1,500|
|Up to 6 months||£750||£3,000|
|More than 6 months||£1,500||£7,500|
Penalties double if returns are late in two successive financial years.
You might avoid a fine if a close relative died shortly before the self assessment deadline, you've been seriously ill, or if you had major IT problems.