Penalties: Income Tax and Capital Gains Tax

The following details explain the penalties for Income Tax and Capital Gains Tax for late filing and related matters. 

Fixed penalties arise automatically where an individual fails to submit their completed tax return by the filing date. If HMRC sends a letter requiring completion of a tax return the normal deadline can be extended to three months from the date of the letter if the letter is dated after 31 October for online returns (after 31 July for paper returns). The initial penalty is fixed at £100. Further penalties now apply if the tax return is still outstanding three months after the filing date or later as shown below:

Length of delay
One day
Three months
£10 per day (max 90 days)
Six months
Higher of £300 or 5% of tax due
Twelve months
Higher of £300 or 5% of tax due
  • Note: Each penalty due is in addition to the previous penalty, e.g. a delay of six months could mean penalties of at least £490 (£100 + £90 + £300). The penalty for twelve months’ delay could, in serious cases, be as much as 100% of the tax due (in addition to the penalties for earlier periods).

Penalties may be charged for failing to keep adequate records in support of the tax return. In general terms all records of a company or an individual taxpayer with a business must be kept for five years after the filing deadline date for the return. This period is normally reduced to one year for individual taxpayers who do not have a business or rental income.

There are also penalties for failing to supply information or documents when requested by HMRC.

We have created several posts surrounding Tax Penalties for further reading here.

For more information, we provide a Business Consultation to ensure our clients benefits from tax planning and accounting matters.

For any assistance contact Companies999, we will be happy to help you!

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