HMRC to rake in £100million from fines after one million taxpayers miss deadline

HMRC stands to collect more than £100million from the initial fines alone due to the volume of missed submissions.

Historical data shows the tax authority has previously collected more than £200million in late filing penalties in some years.

The latest figure represents an improvement on the previous tax year, when more than 1.1 million people missed the deadline.

Myrtle Lloyd, HMRC’s chief customer officer, urged those who failed to submit on time to act quickly.

“Anyone who missed the deadline should file their return as soon as possible, as penalties and late payment interest may be charged.”

Nearly 11.5 million taxpayers submitted their returns before the deadline passed at midnight on Saturday. On the final day alone, 475,722 people filed their paperwork, lower than the 732,000 who waited until the final day the previous year.

HMRC figures show the busiest period for online submissions was between 17:00 and 18:00 on Saturday. In the final hour before the 23:59 cut off, 27,456 people submitted their returns.

HMRC extended its helpline hours and webchat services over the weekend following criticism of an earlier decision to keep phone lines closed on deadline day.

The tax authority said the surge in last minute submissions prompted it to ensure support was available.

Penalties increase significantly for taxpayers who continue to delay filing. After three months, daily fines of £10 apply, accumulating to a maximum of £900.

At six months overdue, an additional penalty is charged, calculated as either five per cent of the outstanding tax or £300, whichever is higher. The same charge is applied again after twelve months of non compliance.

Separate penalties apply for late payment of tax owed. A five per cent charge is added after 30 days, with further penalties at six months and twelve months. Interest is also charged on unpaid tax.

The interest rate currently stands at 7.75 per cent, which is 50 basis points higher than last year. Any tax from the 2024 to 25 tax year that remains unpaid by March 1 may also attract an additional 5 per cent penalty.

Charlene Young, senior pensions and savings expert at AJ Bell, said several factors may have contributed to missed deadlines this year.

Ms Young said, “Despite relaxation of some filing rules for the 2024 to 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.”

She said changes introduced during the tax year added complexity for some taxpayers.

Capital gains tax rates increased on October 30, with basic rate taxpayers paying 18 per cent and higher rate taxpayers paying 24 per cent.

Changes to the high income child benefit charge threshold also took effect in April, with the starting limit rising to £60,000.

Ms Young said some taxpayers mistakenly believed they no longer needed to file returns following changes affecting those earning more than £150,000.

She said this exemption only applies where HMRC has directly confirmed a return is no longer required.

Taxpayers who missed the deadline can appeal penalties through the gov.uk website if they have valid grounds.

Ms Young said some taxpayers may be able to have penalties cancelled entirely if they were not required to submit a return.

She said, “It is often worth paying the initial penalty, even if you are planning to appeal,” adding that paying upfront avoids interest being charged on the penalty if the appeal is unsuccessful.

HMRC said taxpayers who owe money but cannot pay immediately may be able to arrange a payment plan. The tax authority said individuals who believe they no longer need to file a return should inform HMRC promptly to prevent further penalties.