How to pay a Self Assessment penalty

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

Missing the deadline for filing 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'. 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.

It’s worth noting that 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 make sure you keep track of the deadlines that apply to you to avoid any nasty surprises.

If you’ve received a Self Assessment penalty notice, here are the ways that you can pay it 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 filing 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.

Before you get started

If you receive a ‘Notice to Pay’ for a penalty from HMRC, there will usually be a payslip attached and a payment reference number. If you’re unsure about the payment reference or don’t have one, contact the HMRC payments team. It’s worth double checking that you use the correct reference or your payment could be delayed.

If you misplace the payslip, don’t panic, you can print another one.

Ways to pay your Self Assessment penalty

There are six 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. 

Remember, you must pay a Self Assessment penalty within 30 days of the date on the penalty notice. If the payment deadline falls on a weekend or bank holiday, the payment must arrive with HMRC by the last working day before that date. 

Note: you can no longer pay a Self Assessment penalty at the Post Office.

1. Direct Debit

If you’re registered to use HMRC Online Services, you can set up a Direct Debit payment through your HMRC account using the penalty reference number. Remember to set it up five working days before the date you want your first payment to be collected as it can take a few days to process. 

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 on the back. Send your cheque to this address:

HMRC
Direct
BX5 5BD

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 scenario 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 as the payment reference.

4. In branch

You can make a Self Assessment penalty payment in person at your bank or building society and, as long as 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 written on the back. You’ll also need to include the payslip that you receive with the penalty notice.

5. Through your online or mobile bank account

You can pay a penalty using your online or mobile bank account on the HMRC website by selecting 'My payment starts with an X', entering your penalty reference number and selecting ‘Pay by bank account’. You will then be prompted to sign into your digital banking to approve the payment.

Penalty payments that are approved through your digital bank account are usually received on the same day.

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

Please note that you can’t pay a penalty with a personal credit card. Also, if you use a corporate card, HMRC will add a non-refundable fee. 

Avoid Self Assessment penalties with FreeAgent

From auto-populating parts of your Self Assessment forms to submitting your tax return directly to HMRC, FreeAgent offers everything you need to file your Self Assessment with confidence. Try a 30-day free trial of FreeAgent to find out more.

Originally published 1 February 2023
Last updated 2 February 2024