How the HMRC fine schedule works
Unlike the US, where penalties stop accruing relatively quickly, the UK applies four discrete penalty tiers that fire at fixed dates after the deadline. Tax liability does not affect the first two tiers, only the last two. Interest then runs alongside on any unpaid tax.
- Day 1: GBP 100 fixed. Triggered the moment the deadline passes. Applies even if you have nothing to pay or are owed a refund.
- Month 3: daily accrual. From day 91, GBP 10 per day for up to 90 days, capping at GBP 900 (so the daily tier maxes out at month 6).
- Month 6: tax-geared penalty. Greater of 5% of the tax owed or GBP 300, whichever is higher. This is on top of the fixed and daily penalties.
- Month 12: second tax-geared penalty. Same formula again: 5% or GBP 300. If HMRC can prove you deliberately withheld information, the percentage jumps to 70% (or 100% if concealed) under Sch 55 para 6.
- Late payment penalties: Schedule 56 is a separate scheme. 5% of unpaid tax at 30 days, again at 6 months, again at 12 months.
- Interest under FA 2009 s 101: Bank of England base rate + 4 percentage points, compounded daily. As of 2026 with base rate at 4.5%, the late payment interest rate is 8.5% per year. Repayments accrue interest at base rate minus 1% with a 0.5% floor.
HMRC late payment interest rate by year (recent)
HMRC sets the late payment interest rate as Bank of England base rate plus 4 percentage points. From October 2024 the standard rate became base + 4 (previously base + 2.5). The table below shows the prevailing rate for each calendar year.
| Period | Late-payment rate | Source |
|---|---|---|
| 2026 (Q1-Q2) | 8.5% | BoE 4.5% + 4 (HMRC update Feb 2026) |
| Apr 2025 - Dec 2025 | 8.5% to 8.0% | HMRC interest rates page |
| Oct 2024 - Mar 2025 | 7.75% to 7.5% | After Oct 2024 reform (+4 vs +2.5) |
| 2023 - mid 2024 (avg) | ~7.5% | BoE base 5.25% + 2.5 |
| 2020 - 2022 (avg) | ~3% | BoE base near 0% |
The calculator uses a blended ~6.5% effective rate when years span this range. For an exact figure, use your HMRC online account or call the Self Assessment helpline on 0300 200 3310.
Worked example: GBP 5,000 Self Assessment, 18 months late
| Component | Amount |
|---|---|
| Tax due | GBP 5,000 |
| GBP 100 fixed (day after 31 Jan) | GBP 100 |
| GBP 10/day, 90-day cap | GBP 900 |
| 6-month: greater of 5% (GBP 250) or GBP 300 | GBP 300 |
| 12-month: greater of 5% (GBP 250) or GBP 300 | GBP 300 |
| Late payment penalty (Sch 56): 5% at 30 days + 5% at 6 mo + 5% at 12 mo | GBP 750 |
| Interest: ~8% per year on rolling balance, 18 months | ~GBP 615 |
| Total owed HMRC | ~GBP 7,965 |
A GBP 5,000 underpayment becomes nearly GBP 8,000 within 18 months. The fixed tiers alone (GBP 1,600 of fines) outweigh the interest until balances exceed roughly GBP 20,000.
Corporation Tax vs Self Assessment
The penalty structure differs by return type. Both share the GBP 100 fixed start, but the daily and tax-geared tiers diverge.
| Trigger | Self Assessment | Corporation Tax |
|---|---|---|
| Day after deadline | GBP 100 fixed | GBP 100 fixed |
| 3 months | GBP 10/day x 90 = GBP 900 | + GBP 100 fixed (second penalty) |
| 6 months | Greater of 5% or GBP 300 | 10% of estimated tax |
| 12 months | Greater of 5% or GBP 300 | Additional 10% of estimated tax |
| Repeat late filer (3 in a row) | GBP 100 to GBP 500 fixed escalates | GBP 500 (3rd time) |
Reasonable excuses HMRC accepts
- Bereavement of a partner or close relative shortly before the deadline.
- Serious or life-threatening illness with medical evidence.
- Fire, flood, or theft preventing the return from being prepared.
- Postal delays not anticipated (e.g., Royal Mail strike action).
- HMRC online services failure (system outage on or near the deadline).
- Disability or assistive software incompatibility.
- Unexpected hospital stay for the taxpayer or their dependant.
Not accepted by HMRC: pressure of work, complexity of the return, finding tax software too expensive, relying on someone else who failed to file, or forgetting the deadline. See gov.uk reasonable excuses guidance.
Frequently asked questions
I owe nothing or am due a refund. Do I still get fined?
Yes. The GBP 100 fixed penalty and the GBP 10/day penalty apply regardless of tax owed. The 6-month and 12-month penalties have a minimum of GBP 300 each. So a nil-return filed 12 months late could still cost GBP 1,600 in penalties (100 + 900 + 300 + 300). The greater-of-5%-or-300 rule means the 300 floor binds whenever 5% of the liability is below 300.
Can I avoid the daily GBP 10 by filing on day 90?
Yes. The daily penalty only starts after the return is 3 months late. Filing on day 89 means the daily tier never fires, but you still owe the GBP 100 fixed. Late payment penalties under Sch 56 are unaffected by when you file; they run from the unpaid tax balance.
What is the HMRC official rate of interest for 2026?
As of February 2026, the late payment rate is 8.5% per year (Bank of England base rate of 4.5% plus 4 percentage points). The rate is reviewed each time the BoE adjusts base rate. The repayment rate (interest HMRC pays you on overpaid tax) is base rate minus 1%, with a 0.5% floor.
How do I appeal a penalty?
Use form SA370 for individual Self Assessment, or appeal through your HMRC online account or business tax account, within 30 days of the penalty notice. Set out your reasonable excuse with dates and supporting evidence. HMRC will respond by post or to your online account.
Will Time to Pay reduce the penalty?
A Time to Pay arrangement made BEFORE the late-payment penalty trigger (30 days, 6 months, 12 months) can defer or remove that tier. It does not affect the late filing penalties under Sch 55, which depend only on when the return is filed.
Can the 12-month penalty really hit 100%?
Yes, in cases of deliberate concealment. Schedule 55 paragraph 6 increases the 5% rate to 70% if HMRC proves the failure was deliberate, and 100% if information was deliberately withheld and concealed. These higher rates are reserved for evasion cases and require an HMRC compliance check.
What if I have not filed for several years?
Each tax year accrues its own GBP 100 fixed + GBP 900 daily + GBP 300 + GBP 300 = GBP 1,600 minimum in late filing penalties. Five missed years can cost GBP 8,000+ in penalties alone before any tax or interest. Filing voluntarily under the Worldwide Disclosure Facility or contractual disclosure facility can reduce the tax-geared tiers significantly.
Are the penalties tax-deductible?
No. Penalties for late filing or late payment are not deductible for income tax or corporation tax purposes. Interest paid on overdue tax is similarly non-deductible for individuals; for companies under the loan relationships rules, late payment interest may be deductible against trading profits.
Sources and methodology
- HMRC SA371: Self Assessment penalties. Updated 2025-10.
- Schedule 55, Finance Act 2009. Statutory text for late filing penalties.
- Schedule 56, Finance Act 2009. Statutory text for late payment penalties.
- HMRC interest rates for late and early payments. Updated quarterly.
- gov.uk: Appeal a tax penalty. Procedure and reasonable excuse guidance.
- gov.uk: Reasonable excuses. HMRC's published criteria.