The penalties that catch first-timers

The dates

Late filing escalates

1 day late        £100, even if you owe nothing
3 months late     £10 a day for up to 90 days      (up to £900)
6 months late     5% of the tax due, or £300 if greater
12 months late    another 5%, or £300 if greater

They stack. A return a year late has collected all four before any tax or interest is considered.

Late payment is separate

Paying late attracts its own penalties at 30 days, 6 months and 12 months, each 5% of the amount outstanding, plus interest running from the due date. Filing late and paying late are two failures, not one.

Late registration

Missing the 5 October registration deadline can produce a failure-to-notify penalty based on the tax you owed. It is often reduced or removed if you come forward voluntarily and the tax is paid on time, which is a good reason to register late rather than not at all.

The bit HMRC does not spell out

If you cannot pay, file anyway. Filing costs nothing and stops the larger, faster-escalating penalty clock. Once your return is in and the amount is known, a Time to Pay arrangement can often spread the bill by instalments.

First-timers do the opposite. They cannot pay, so they avoid filing, and end up owing the tax, the interest, the late payment penalties and the late filing penalties. The last of those was entirely avoidable and is usually the largest.

Reasonable excuse

Penalties can be appealed where there is a reasonable excuse: serious illness, bereavement, a genuine HMRC service failure. Being busy, finding it confusing, or relying on someone else are explicitly not reasonable excuses.

You have reached the end

You now know whether you need to file, which allowances may cover you, how side income is taxed on top of a salary, how savings and dividends work, where online selling sits, and how to register and file without collecting a penalty. The exam covers all three modules.