Tax. It’s a necessary evil. Something we all have to pay, but nobody’s idea of a good time. Aside from paying tax at all, one thing nobody wants to receive from the tax man is a bill for even more of your money – especially when that bill is for a fine because you’ve built up too many penalty points.

Good news! With proper preparation and the right support, you can steer clear of receiving another unwelcome surprise bill from HMRC.

How do you get a penalty?

Simple. By missing deadlines.

There are 3 deadlines you need to be aware of EVERY tax year..

  • The deadline for filing your tax return – October 31 if you’re doing a paper return, the following January 31 if you’re doing it online.

  • The deadline for paying your first tax payment – January 31

  • The deadline for your second payment (payments on account) – July 31

Miss any of these deadlines, and you’ll pick up penalty points.

And what do points make? Pri… Fines.

How much could it cost?

Straight away, you’ll be charged £100 just for missing a deadline. Miss it by more than six months, and you’ll pick up an additional fine.

For every day late you are paying your tax bill, you’ll be charged interest. The HMRC website has a calculator showing exactly what you’ll pay, but let’s look at an example.

Meet Dave. Dave earned £31,250 for the period ending 2023 as a freelance website developer, his tax return totalled £3,726.

He was just a month late submitting his return on February 29, 2024.

Suddenly, Dave owed over £4,000:

  • His original bill of £3,726

  • His late return penalty of £100

  • His late payment penalty of £186.30

  • Interest of £46.68

That’s an additional £333.06 just for being two months late. Freelancers know that an invoice being two months overdue isn’t actually that rate. So you might be at risk of picking up a few points and running up your bill.

How to avoid penalty points

Even the tax man isn’t totally heartless. The UK government does offer a number of “reasonable excuses” for missed deadlines that might stop you picking up penalty points.

They include the death of a partner, a stay in hospital, life threatening illnesses and destructive fires.

They don’t include you not having enough money to pay, you finding it too hard to use the online tax return system, or you just being too busy and forgetting.