- Despite almost 11.5 million tax returns landing with HMRC before the 31 January deadline, an estimated 1 million did not file on time according to figures from HMRC
- The automatic £100 for late filing means HMRC could rake in over £100 million from those who missed the deadline alone, with figures showing HMRC sometimes collects over £200m from a range of late filing penalties
- Estimated number of taxpayers missing the deadline is a slight drop compared to last year, when late returns topped 1.1 million
- Phone lines were opened on Saturday to help with surge in queries, following criticism of the original decision to keep them shut on deadline day
- How to appeal fines if you think you have grounds to
Charlene Young, senior pensions and savings expert at AJ Bell, comments:
“Despite relaxation of some filing rules for the 2024/25 tax year, the latest update from HMRC estimates over 1 million people still missed the filing deadline and will receive an automatic £100 fine.
“More than 12 million were expected to file for the 2024/25 tax year, broadly in line with last year, but fewer people left it until the final day this year. Figures show 475,722 filed on 31 January (down from over 732,000 last year), with 27,456 in the final hour before the 23.59pm deadline.
“In previous years, taxpayers had to file if they earned over a £100,000, and later £150,000, a year. Although that rule has now fallen away where a person’s only income source is taxed under PAYE, it’s likely many people believed they didn’t need to file if their circumstances changed or they have no tax to pay. This is only true if HMRC already confirmed to you directly that you don’t need to file.
“Taxpayers with gains to report had an added challenge this year. The main rates of capital gains tax (CGT) increased to 18% for basic rate taxpayers and 24% for those paying higher rates on 30 October 2024. But the mid-year change meant some people risked underreporting and underpaying any tax they owe for 2024/25, or having to navigate an extra online calculator if they rely on HMRC’s systems – perhaps because they file without the help of commercial software or an accountant.
“The 2024-25 tax year was also the first year of the higher child benefit clawback thresholds. The starting limit went up on 6 April 2024 to £60,000, before the benefit was completely extinguished over £80,000 under the High Income Child Benefit Charge rules.
“Although there are now systems to collect the clawback via PAYE, people who needed to repay some or all of their child benefit payments for that year might have had to repay via self-assessment if their tax code wasn’t adjusted already to account for it.
HMRC windfall
“An estimated 1 million people failing to file could net HMRC £100 million in automatic fees alone. There is an automatic £100 fine for late filing, with extra daily penalties of £10 after 3 months (up to a maximum of £900), and additional penalties kicking in after 6 and 12 months. These late chares apply even if there is zero tax to pay, meaning those who didn’t realise they needed to file or failed to tell the taxman why they no longer needed to for 2024/25 would have been caught. Some 600,000 people with zero tax to pay have been fined in the five years to 2025, according to analysis by Tax Policy Associates.
“Along with the late penalty, daily interest will start to accrue based on an annual rate of 7.75% on any tax owed. This is 50 basis points higher than last year. Anything for 2024-25 still left unpaid by 1 March could suffer an extra 5% penalty charge. These percentage charges apply to unpaid tax due last year, not payments on account that have been calculated for the coming year, based on last year’s bill.
How to appeal
“Taxpayers can appeal any late payment fines via the gov.uk website, if they feel they have grounds. Many people don’t realise that you can also ask HMRC to cancel a penalty if you did not have to send a tax return.
“It’s often worth paying the initial penalty, even if you’re planning to appeal. Although it involves shelling out cash, it avoids you paying interest on the penalty itself from the date it became due if you lose your appeal.
“If you don’t have an excuse to appeal a fine but still owe money, you might still be able to set up a payment plan to get back on track. It’s essential you don’t put your head in the sand.
“If you believe you no longer need to complete a return, you should tell HMRC as soon as possible, to avoid the extra late fines.
“Looking forward to next year, pensioners with income over the winter fuel payment means test should be aware that this will be reclaimed for the 2025-26 tax year via the returns due by 31 January 2027.
How much does HMRC collect in penalties?
HMRC can apply late filing penalties:
- an initial £100 penalty
- after 3 months, additional daily penalties of £10 per day, up to a maximum of £900
- after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater
- after 12 months, another 5% or £300 charge, whichever is greater
Data disclosed by Exchequer Secretary Dan Tomlinson in 2026 shows that HMRC has collected late filing penalties worth over £200m in some years:
Source: AJ Bell/HMRC/Hansard. Tax year relates to the year associated with the return, not the year the penalty was issued. Figures are not final as penalties continue to be charged and collected for previous years.
