Which penalty applies to this late return or late payment? Three questions, eight answers

This questionnaire is for the moment a client rings to say something is late, or is about to be. Until April 2026 the answer for a personal tax return was always £100. Now there are two Self Assessment scales running side by side, a points system for VAT, a first year without penalties for Making Tax Digital quarterly updates, and Companies House's own scale for accounts. The three questions ask what is late, whether it is the return or the money, and which tax year it is for. The outcome names the scale and its first figure, from GOV.UK pages read on 2 October 2026.

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Late return or late payment: which penalty scale applies

Answer each question. Some questions appear only when an earlier answer makes them relevant. Nothing you choose leaves this page.

1. What is late, or about to be late, for this client?ChooseA Self Assessment return, or the tax due on itA quarterly update under MTD for Income TaxA VAT return, or the VAT due on itA company's annual accounts at Companies House
2. Is it the return that is late, or the payment?ChooseThe returnThe payment
3. Which tax year is the Self Assessment return or payment for?Choose2025 to 2026 or earlier, or 2026 to 2027 for a client not in MTD2026 to 2027 for a client in MTD, or any later tax year

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The outcome is the rule as our guides and the sources named set it out, applied to the answers you gave. It is not advice on your own case.

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The questions, and why each is asked

1. What is late, or about to be late, for this client? Four penalty regimes cover most of a small practice's filings. Self Assessment, MTD quarterly updates and VAT belong to HMRC, each with its own rules; late accounts are penalised by Companies House on a separate scale.

2. Is it the return that is late, or the payment? HMRC penalises late filing and late payment separately, on different scales, so a client who is late with both gets both. Answer for one, then run the questions again for the other. This question appears only when an earlier answer makes it relevant.

3. Which tax year is the Self Assessment return or payment for? GOV.UK says the new penalties apply from the tax year a client joins MTD for Income Tax, and to everyone who sends a personal return from April 2027. Earlier years stay on the old scale. This question appears only when an earlier answer makes it relevant.

Every outcome, and the rule behind it

No penalty for a late quarterly update in 2026 to 2027; points after that

Reached when: "What is late, or about to be late, for this client?" answered "A quarterly update under MTD for Income Tax".

GOV.UK's page on penalties for Making Tax Digital for Income Tax, updated 30 March 2026, says there are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year. The update must still be sent, because the tax return cannot be submitted without it. For tax years after 2026 to 2027, each missed quarterly deadline earns one penalty point, and only one for each deadline however many businesses the client has. At four points the penalty is £200, and £200 again for each deadline missed after that.

• Send the missed update from compatible software as soon as the records are in.
• Tell the client that from 6 April 2027 the same lateness earns a penalty point.
• Move the client's date for sending records so the figures arrive well before the 7th.

Source: GOV.UK, Penalties for Making Tax Digital for Income Tax (updated 30 March 2026), read 2 October 2026. The working is in MTD for Income Tax.

The new scale: one penalty point for the late return, £200 at four points

Reached when: "What is late, or about to be late, for this client?" answered "A Self Assessment return, or the tax due on it"; "Which tax year is the Self Assessment return or payment for?" answered "2026 to 2027 for a client in MTD, or any later tax year"; "Is it the return that is late, or the payment?" answered "The return".

Under the new penalties a personal tax return sent after 31 January earns one penalty point in place of the old £100. Each missed quarterly update deadline, for tax years after 2026 to 2027, earns one as well. The threshold is four points: reaching it brings a £200 penalty, and each later missed deadline another £200. Below the threshold a point is removed 24 months after the missed deadline. At the threshold, points go only after 12 months of on-time submissions with everything for the previous 24 months sent. Trust and partnership returns stay on the old scale.

• File the return at once; one deadline earns one point however late the return is.
• Check in the client's HMRC online account how many points they hold and when each expires.
• Appeal the point if there was a reasonable excuse; HMRC's letter says how.

Source: GOV.UK, Penalties for Making Tax Digital for Income Tax (updated 30 March 2026), read 2 October 2026. The working is in MTD for Income Tax deadline checker.

The new scale for late payment: nothing to day 15, then 3%, 3% and 10% a year

Reached when: "What is late, or about to be late, for this client?" answered "A Self Assessment return, or the tax due on it"; "Which tax year is the Self Assessment return or payment for?" answered "2026 to 2027 for a client in MTD, or any later tax year".

Under the new penalties a balancing payment for 2026 to 2027 paid up to 15 days late carries no penalty. Paid 16 to 30 days late, it costs 3% of the tax owed at day 15. From day 31 it costs that 3%, another 3% of the tax owed at day 30, then 10% a year on the unpaid amount, charged daily. For 2027 to 2028 both 3% rates become 4%. In a client's first year under the new penalties GOV.UK allows 30 days, not 15, to pay or ask for a payment plan. Payments on account are not penalised.

• Pay in full, or ask HMRC for a payment plan, inside the first 15 days (30 in the first year).
• Work each 3% on the tax still unpaid at day 15 and at day 30, not on the whole bill.
• Keep the date the client contacted HMRC: penalties pause from then if a plan is agreed and kept.

Source: GOV.UK, Penalties for Making Tax Digital for Income Tax, table of late payment penalties (updated 30 March 2026), read 2 October 2026. The working is in How long do you have to appeal an HMRC penalty? 30 days from the date on the notice, and the three clocks that follow.

The old scale: £100, then £10 a day, then 5% or £300 twice

Reached when: "What is late, or about to be late, for this client?" answered "A Self Assessment return, or the tax due on it"; "Is it the return that is late, or the payment?" answered "The return".

A Self Assessment return for 2025 to 2026 or earlier, or a 2026 to 2027 return from a client outside MTD, is on the scale GOV.UK sets out: £100 straight away, even with no tax to pay; after 3 months, £10 a day up to a maximum of £900; after 6 months, 5% of the tax due or £300, whichever is greater; after 12 months, another 5% or £300. The online deadline for a 2025 to 2026 return is 31 January 2027. If a partnership return is late, every partner is charged.

• File before the 3-month point: the daily penalties add up to £900 over the next 90 days.
• Estimate the tax and pay it now, because the payment penalties run on a separate clock.
• Appeal within 30 days of the date on the notice if there was a reasonable excuse.

Source: GOV.UK, Self Assessment tax returns: Penalties, read 2 October 2026. The working is in Self Assessment late filing and late payment penalty calculator (2026 rates).

The old scale for late payment: 5% at 30 days, 6 months and 12 months

Reached when: "What is late, or about to be late, for this client?" answered "A Self Assessment return, or the tax due on it".

Tax for 2025 to 2026 or earlier, or for 2026 to 2027 where the client is outside MTD, is on the scale GOV.UK sets out: a penalty of 5% of the tax unpaid at 30 days, another 5% of what is unpaid at 6 months and another 5% at 12 months. Interest is charged on the amount owed as well. On a balancing payment of £4,800 due on 31 January 2027 and still unpaid 30 days later, the first penalty is £240. Any penalties for a late return are separate and are added to these.

• Pay what the client can before day 30: the 5% is charged on what is still unpaid then.
• Ask HMRC about a payment plan before the 30 days are up if the client cannot pay in full.
• Show the client both clocks with the figures in the linked calculator guide.

Source: GOV.UK, Self Assessment tax returns: Penalties, read 2 October 2026. The working is in Self Assessment late filing and late payment penalty calculator (2026 rates).

One penalty point for the late VAT return; £200 at the threshold

Reached when: "What is late, or about to be late, for this client?" answered "A VAT return, or the VAT due on it"; "Is it the return that is late, or the payment?" answered "The return".

For VAT accounting periods starting on or after 1 January 2023, each late return earns one penalty point, and that includes a nil or repayment return. The threshold depends on how often the client files: 2 points for annual returns, 4 for quarterly and 5 for monthly. At the threshold the penalty is £200, and £200 again for each later late return while the client stays there. VAT points are separate from MTD for Income Tax points. The rules do not apply to a newly registered client's first return or to a final return after registration is cancelled.

• Submit the return now, even a nil one: the point is for lateness, not for tax owed.
• Check the client's VAT online account for the points held and the threshold for their period.
• Ask for a review through the VAT online account if there was a reasonable excuse.

Source: GOV.UK, Penalty points and penalties if you submit your VAT Return late (updated 1 March 2023), read 2 October 2026. The working is in How long do you have to appeal an HMRC penalty? 30 days from the date on the notice, and the three clocks that follow.

VAT paid late: nothing to day 15, 3% from day 16, more from day 31

Reached when: "What is late, or about to be late, for this client?" answered "A VAT return, or the VAT due on it".

GOV.UK's page on late payment penalties for VAT, updated 10 July 2025, gives three bands. VAT paid in full up to 15 days overdue carries no penalty. Paid between day 16 and day 30, the first penalty is 3% of the VAT owed at day 15. From day 31 the first penalty is 3% of what was owed at day 15 plus 3% of what is still owed at day 30, and a second penalty runs at 10% a year, charged daily until the balance is paid. GOV.UK's own example: £15,000 paid 51 days late costs £900 plus £86.30.

• Pay in full by day 15 and no late payment penalty is charged.
• If the client cannot pay, ask HMRC for a Time to Pay arrangement before day 15 or day 30.
• Keep to the arrangement: if it is cancelled, the penalties are charged as if it never existed.

Source: GOV.UK, How late payment penalties work if you pay VAT late (updated 10 July 2025), read 2 October 2026. The working is in How long do you have to appeal an HMRC penalty? 30 days from the date on the notice, and the three clocks that follow.

The Companies House scale: £150 to £1,500, doubled for a second late year

Reached when: any other set of answers.

Late accounts bring an automatic Companies House penalty, measured from the date the accounts were due. For a private company or LLP it is £150 for accounts not more than 1 month late, £375 for more than 1 month but not more than 3, £750 for more than 3 months but not more than 6, and £1,500 after that. A public company pays £750, £1,500, £3,000 or £7,500. The penalty is doubled if accounts are filed late in 2 successive financial years. A private company has 9 months from the end of its accounting reference period to deliver accounts.

• File before the next band starts: one day into a band costs the whole step.
• Check whether last year's accounts were late too, because that doubles this year's penalty.
• Do not count on an appeal: relying on an accountant is not accepted as a reason on its own.

Source: Companies House, Late filing penalties (updated 16 January 2026), read on GOV.UK 2 October 2026. The working is in Companies House late filing penalty calculator, and the confirmation statement date.

How to use the result

Use the outcome to tell the client which scale they are on and what the next date costs. Filing and payment are penalised separately, so a client who is late with both should be taken through the questions twice. The figures are the scale, not the bill: interest runs on unpaid tax as well, and HMRC can cancel a penalty where there was a reasonable excuse. If a penalty notice has already arrived, the date on it starts the appeal period. Tax advice and sign-off stay with the accountant.

The outcome applies the rule to the answers given; it cannot see the facts behind them. Where an answer is a judgement, or the facts are unusual, the outcome may not fit. This page is general information, not legal advice.

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