What Is The Cost of Missing the 31st January Tax Deadline?

January always seems to arrive in a flash after the festive rush, doesn’t it? With December barely in the rear-view mirror, filing your tax return might not have made it to the top of your to-do list. If the 31st January 2025 deadline to submit your tax return and pay what’s owed for the year ending 5th April 2024 has passed you by, you’re far from alone.

As of 6th January, HMRC reported that 5.4 million people still hadn’t filed. While there’s some comfort in knowing you’re not the only one, acting quickly is crucial—those penalties can pile up fast. Whether this is your first time dealing with self-assessment or you’ve been doing it for years, understanding the next steps can help you limit the damage and get back on track.

What Happens If You Don’t File Your Tax Return on Time?

HMRC operates a strict penalty system to encourage taxpayers to meet their deadlines. Missing the 31st of January 2025 cut-off triggers an immediate £100 penalty – even if you owe no tax or have already paid the full amount. But that’s just the beginning:

• Three Months Late: For every additional day you don’t file, HMRC charges £10, up to a maximum of £900.
• Six Months Late: You’ll face a further penalty of either £300 or 5% of the tax owed (whichever is higher).
• Twelve Months Late: Another £300 or 5% of the owed tax applies. In serious cases, you could even be charged up to 100% of the unpaid tax.

These penalties are designed to escalate, so the longer you wait, the higher the financial burden.

It’s not just the rising penalties, you might need to worry about. Not getting your tax return in on time can also affect any benefits or allowances you get that depend on your tax return information. Things like tax credits or certain reliefs might be impacted. Not to mention that in serious cases where someone repeatedly doesn’t file their taxes, HMRC might take legal action. This could mean more fines or other legal trouble.

What If You Don’t Pay the Tax You Owe?

Filing your return is only half the job – paying what you owe by the same deadline is equally critical. Failure to do so will result in interest and late payment penalties:

• Interest on Unpaid Tax: HMRC charges daily interest (currently 7.75%, subject to change) from 1st February 2025 until the amount is paid in full.
• 5% Penalties: On top of interest, HMRC will add a 5% surcharge on unpaid tax if it remains unpaid after 30 days. Further 5% penalties apply after six months and again after 12 months.

Unpaid tax can also result in serious consequences, including enforcement action. HMRC could seize assets, deduct money directly from your bank account, or even pursue legal action if the debt remains unresolved.

What Should You Do If You’ve Missed the Deadline?

The good news is, that it’s never too late to act. The sooner you address the issue, the easier it will be to minimise the financial and emotional strain.

1. File Your Return ASAP: Even if you can’t pay the tax owed right now, filing your return will stop additional late-filing penalties from accruing.
2. Pay What You Can: Partial payments can reduce the interest and late-payment penalties you’ll face.
3. Contact HMRC: If you’re struggling to pay, HMRC might allow you to set up a Time to Pay arrangement, spreading the debt into manageable instalments.
4. Seek Professional Advice: A tax expert can help you navigate the situation, ensuring you meet your obligations while minimising penalties.

Avoiding Future Missed Deadlines

Missing a tax deadline can feel overwhelming, but it’s an opportunity to put better systems in place for the future. Here’s how to stay on top of things moving forward:

• Set Reminders: Mark key dates in your calendar and consider setting multiple alerts as the deadline approaches.
• Organise Paperwork Early: Start gathering records of income, expenses, and other documents well before the end of the tax year.
• Work with a Tax Expert: Partnering with a professional can save you time and stress, ensuring your return is filed accurately and on time.

How can AAB help?

If you’ve missed the 31st January deadline, don’t panic – but don’t wait, either. The longer you delay, the more penalties and interest will pile up. By acting now, you can stop things from spiralling further and regain control of your tax obligations.

Need help? Our team of tax experts is here to take the pressure off. Whether you’re late filing, struggling to pay, or just unsure where to start, we’ll help you find a solution that works for you. If you have any queries please do not hesitate to get in contact with Feargal McCormack, or your usual AAB contact.