HMRC charges £325m in late tax return penalties

HMRC charges £325m in late tax return penalties

HMRC charged taxpayers £325m in fines and interest for late tax payments in 2025 as 600,000 taxpayers were hit with penalties after missing the 31 January deadline.

As well as that, the amount of unpaid self-assessment tax in the 2023-24 return cycle was eye-watering. HMRC estimates that £8.7bn of self-assessment tax was unpaid last year, 12.5% of the £69.6bn it expected to collect in the 2023-24 tax year. In total, £44bn in business and personal taxes are currently overdue, of which 86% or £37.8bn is now ready for debt collection processes.

HMRC is unlikely to ease the pressure on those failing to submit their returns and pay their taxes on time, as such large amounts of tax go unpaid each year.

Failure to pay taxes and file on time results in an automatic £100 penalty and interest on any tax paid late. Further penalties apply if delays continue, including a 5% charge if the tax remains unpaid after 28 February, meaning that the cost of not paying your self-assessment tax can rise quickly. Initial penalties may be relatively small, but interest and further charges add up and can really start hurting quite quickly.

If you are unable to pay your tax bills in full you can negotiate a ‘Time to Pay’ arrangement with HMRC. This allows you to spread the cost in instalments rather than paying a single lump sum. These agreements are typically easier to secure before penalties build up, but the tax debt must be under £30,000.