For millions of people across the UK, January doesn’t just bring cold mornings and tight budgets — it brings a familiar knot in the stomach. As the 31 January tax deadline looms, many are realising too late that missing paperwork, small mistakes, or simple delays can trigger penalties that grow fast and quietly.
In kitchens and spare bedrooms up and down the country, self-employed workers, landlords, pensioners, and side-hustlers are logging into tax accounts with a sinking feeling. Some already have penalties on their records — others are about to.
“I thought I had a bit more time,” said Martin, a 58-year-old freelance consultant from Leeds. “By the time I realised, the fine was already there.”
As January 2026 progresses, HMRC enforcement is in full swing, and penalties are being issued automatically in many cases. Here’s what’s happening, which penalties Brits are already receiving, and what you need to know before the deadline hits.
Why 31 January Matters So Much
The 31 January deadline is one of the most important dates in the UK tax calendar.
By this date, taxpayers must:
- Submit their Self Assessment tax return
- Pay any tax owed for the previous tax year
- Make the first payment on account, if applicable
Failing to meet any of these obligations can trigger penalties — even if the tax owed is small.
Administration and enforcement are handled by HM Revenue & Customs, which now relies heavily on automated systems to issue fines quickly and consistently.
Why Penalties Are Hitting Faster in 2026
Many taxpayers are surprised by how quickly penalties appear.
That’s because HMRC has expanded the use of:
- Automated late-filing penalties
- Digital payment tracking
- Real-time account flagging
- Reduced manual discretion
In practical terms, this means there is no grace period for most people. Miss the deadline, and the penalty is often applied automatically.
An HMRC spokesperson recently summed it up:
“Deadlines are clear. Penalties apply when they are missed.”
The 7 HMRC Penalties Brits Are Already Getting
These are the most common penalties being issued as January progresses — often before people even realise they’re in trouble.
1. The £100 Late Filing Penalty
This is the penalty catching the most people.
If your Self Assessment return is not filed by 31 January, HMRC automatically issues a £100 fine, even if:
- You owe no tax
- You are due a refund
- You missed the deadline by just one day
This penalty applies immediately on 1 February and is non-negotiable in most cases.
Many people mistakenly believe penalties only apply if tax is owed. That is not true.
2. Daily Penalties After Three Months
If the return remains outstanding for more than three months, HMRC can apply daily penalties.
These penalties are:
- £10 per day
- Capped at £900
- Applied automatically
By the time some taxpayers realise what’s happening, hundreds of pounds have already been added.
A retired landlord in Kent said:
“I thought the £100 was the worst of it. I didn’t realise it kept growing.”
3. Late Payment Interest — Even If You File on Time
Filing your return on time does not protect you if you don’t pay.
If tax owed is not paid by 31 January:
- Interest is charged daily
- The rate can change over time
- It applies even if you’re waiting for funds
Interest starts accruing immediately after the deadline.
For people on fixed incomes or with cash-flow issues, this can quickly add up.
4. Late Payment Penalties on Top of Interest
In addition to interest, HMRC can apply late payment penalties if tax remains unpaid.
These penalties are typically:
- 5% of unpaid tax after 30 days
- Additional 5% after 6 months
- Further 5% after 12 months
That’s on top of the original bill and interest.
In long-running cases, the penalties can exceed the original tax owed.
5. Payment on Account Shock Penalties
Many self-employed people are caught out by payments on account.
On 31 January, some taxpayers must pay:
- The remaining tax for the previous year
- Plus an advance payment for the current year
People who don’t realise this applies to them may underpay — triggering penalties even though they thought they’d paid “something”.
“I paid what I thought I owed,” said a graphic designer from Bristol. “Turns out it was only half.”
6. Incorrect Return Penalties
HMRC penalties aren’t limited to lateness.
If your return is found to be incorrect, penalties can apply based on:
- Careless errors
- Failure to take reasonable care
- Deliberate inaccuracies
Penalties are often calculated as a percentage of additional tax owed, not a flat fee.
Even genuine mistakes can lead to fines if HMRC believes reasonable care wasn’t taken.
7. Failure to Notify Penalties
Some people are being fined without ever filing a return — because they failed to tell HMRC they needed one.
This applies if you:
- Started self-employment
- Began earning rental income
- Took on taxable side income
- Exceeded certain thresholds
HMRC can apply penalties for failing to notify, even if the tax involved is modest.
Who Is Most at Risk Right Now
While anyone can be affected, certain groups are seeing higher penalty rates in January 2026.
These include:
- Self-employed workers
- Small landlords
- Pensioners with additional income
- People with side hustles or gig work
- First-time Self Assessment filers
Many of these taxpayers don’t see themselves as “typical” Self Assessment cases — which is exactly why they’re caught out.
Real Stories Behind the Penalties
In Nottingham, 67-year-old Sheila received a £100 fine after forgetting to file a return related to a small private pension.
“I honestly didn’t think it counted,” she said. “It was only a few thousand a year.”
In Manchester, a delivery driver was hit with multiple penalties after missing both filing and payment deadlines.
“I was working nonstop,” he said. “I just didn’t stop to check.”
Why “I Didn’t Know” Doesn’t Work
One of the hardest lessons for taxpayers is that lack of awareness is not a defence.
HMRC does not require:
- Proof that you received reminders
- Confirmation that you understood the rules
- Evidence that you intended to comply
The obligation rests entirely with the taxpayer.
Tribunals consistently uphold this principle.
Comparison: Filing and Paying On Time vs Late
| Situation | Outcome |
|---|---|
| File & pay by 31 Jan | No penalties |
| File late, no tax owed | £100 fine |
| File late, tax owed | £100 + interest |
| Pay late | Interest + penalties |
| Long delay | Escalating fines |
Even small delays can have outsized consequences.
Government Position on Enforcement
HMRC says penalties are necessary to keep the system fair.
A senior official recently stated:
“Most people comply on time. Penalties apply to ensure fairness for those who do.”
There are no plans to soften the 31 January enforcement regime.
Expert Insight: Why Penalties Feel Harsher Now
Tax specialists say enforcement hasn’t necessarily become harsher — just faster.
Automation means:
- Less human discretion
- Faster penalty issuance
- Fewer informal warnings
Accountants say the system now assumes non-compliance unless proven otherwise.
What To Do If You’re Running Out of Time
If you’re close to the deadline:
- File your return even if you can’t pay
- Pay as much as you can by 31 January
- Check your HMRC account for penalties already applied
- Keep records of submissions and payments
Filing late is almost always worse than filing with missing funds.
What If You Can’t Pay?
HMRC may allow Time to Pay arrangements, but these:
- Must usually be set up promptly
- Do not cancel interest
- Do not remove late filing penalties
Waiting until penalties escalate makes arrangements harder.
Common Questions Brits Are Asking Right Now
1. Do I get fined if I owe no tax?
Yes, for late filing.
2. Is there a grace period?
No.
3. Can penalties be appealed?
Only in limited circumstances.
4. Does illness count as a reasonable excuse?
Sometimes, with evidence.
5. What if I never received a reminder?
That doesn’t remove liability.
6. Are penalties automatic?
Yes, in most cases.
7. Can penalties exceed the tax owed?
Yes.
8. Does filing late affect future years?
It can increase scrutiny.
9. What about first-time filers?
The same rules apply.
10. Can pensioners be fined?
Yes.
11. Does partial payment help?
It reduces interest but not all penalties.
12. Will HMRC chase small amounts?
Yes.
13. Are online filings safer?
They reduce technical errors.
14. What’s the biggest mistake people make?
Waiting too long.
15. What’s the safest action now?
File immediately.
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