How to pay a Self Assessment penalty

Although the filing date for online Self Assessment tax returns is ingrained in the minds of most small business owners, it’s inevitable that some people will miss the 31st January deadline. 

Missing the deadline for online returns, or the earlier 31st October deadline for paper returns, could result in a Self Assessment penalty from HMRC unless you have a reasonable excuse.  

HMRC may also issue penalties to those who miss the deadline for paying their Self Assessment tax bill or any deadlines for making payments on account, so it’s worth checking which deadlines apply to you to avoid any nasty surprises.

If you’re facing a Self Assessment penalty, this article outlines the ways that you can pay promptly and avoid further charges from HMRC.

How much is a Self Assessment tax penalty?

HMRC will issue a penalty of £100 for tax returns that are submitted up to three months after the original deadline. If the return is submitted more than three months late, or you’re late in paying your tax bill, this fee will be higher. You can use this handy calculator to estimate how much your penalty will be. 

It’s also important to remember that you’ll have to pay interest on any late Self Assessment tax bill payments and, if you’re in a partnership, all partners can be charged a penalty for a late tax return or payment.

If you’ve received a Self Assessment penalty and you believe you have a reasonable excuse for submitting or paying late, you may be able to appeal HMRC’s decision.

Six ways to pay your Self Assessment penalty

There are several ways to pay a Self Assessment penalty, and the method you choose may depend on the amount of time you have to make the payment. You must pay a Self Assessment penalty within 30 days of the date on the penalty notice. In instances where the payment deadline falls on a weekend or bank holiday, the payment must arrive with HMRC by the last working day before that date. 

It’s important to note that you can no longer pay a Self Assessment penalty at the Post Office.

1. Direct Debit

You can set up a Direct Debit online to collect your payment if you’re registered to use HMRC Online Services. You should set it up five working days before the date you want your first payment to be collected. You can set up your Direct Debit payment through your HMRC account, using the penalty reference number that appears on your penalty notice as the payment reference. 

2. Postal cheque

Penalty payments made by postal cheque must be sent at least three working days before the payment deadline. Make the cheque payable to ‘HM Revenue and Customs only’ and write the penalty reference number that appears on your penalty notice on the back. Send your cheque to the address below, alongside the payslip that you receive with the penalty notice:


3. Online or telephone bank transfer

Penalty payments made online or by telephone bank transfer may be instant, or take a couple of hours, but in the worst case they may take up to three working days - depending on your bank’s processing times and the payment service you use. It’s possible to make a penalty payment by Bacs, CHAPS or Faster Payments directly to HMRC’s account using the penalty reference number that appears on your penalty notice as the payment reference.

4. In branch

You may make a Self Assessment penalty payment in person at your bank or building society and, provided it's made between Monday and Friday, HMRC will accept this payment on the same day. 

You can make an in-branch payment in cash or by cheque. Cheques must be made payable to ‘HM Revenue and Customs only’ with the penalty reference number that appears on your penalty notice written on the back. You must also include the payslip that you receive with the penalty notice.

5. Through your online or mobile bank account

You can pay using your online or mobile bank account on the HMRC website. Penalty payments that are approved through your digital bank account are usually received on the same day.

To make a payment in this way, select 'My payment starts with an X' on the HMRC website, enter your penalty reference number and select ‘Pay by bank account’. You will then be prompted to sign into your digital banking to approve the payment.

6. Debit or corporate credit card

You can make a penalty payment using a personal debit card, corporate debit card or corporate credit card, and HMRC will accept these payments on the day they are made. You can’t pay a penalty with a personal credit card. If you use a corporate card, HMRC will add a non-refundable fee. 

To make a payment in this way, go to the HMRC website and use your penalty reference number as the payment reference. 

Avoid Self Assessment penalties with FreeAgent

From auto-populating parts of the Self Assessment forms to a live Tax Timeline that you can export directly to your personal calendar, FreeAgent offers everything you need to feel confident about Self Assessment. Try a 30-day free trial of FreeAgent to find out more.

Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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