Self assessment - late payment penalty

bring_back_threepenny_bit

I have financial PoA for my mum and filed a 2024/25 tax return for her. I received a letter from HMRC dated 17 September this year saying there was £2970 owing for that year, with the first instalment of £1480 due on 31 January 2026 and the second instalment of the same amount due on 31 July 2026. It then goes on to say that the total amount due by 31 January 2026 is £4480.

It also says I can use the app or Gov UK which I have never managed to register my mum for as she has no passport or other means of ID.

Finally I had a follow up letter dated 22 September with a late penalty charge of £148 based on 5% of the tax owed, of 2970. I would add that both of these letters arrived within the last few days.

I'm confused both about the amount actually owed, and are there any grounds for appeal, given that I was unaware of any tax owing until their letter of 17 September and received some time later.

Caz3121

The deadline for submission of 24/25 tax return and payment of tax due for that year was 31st January 2026

In addition they have calculated payments on account https://www.gov.uk/understand-self-assessment-bill/payments-on-account

these are two payments for the 25/26 tax year and will be balanced off the amount due once the SA for 25/26 is done

So in theory there were 3 payments due

Jan 31st 2026 - tax for 24/25 (£2,970) plus first payment on account (£1,480) = £4,450

July 31st 2026 - second payment on account £1,480

GavCB

Sadly, HMRC want you to pay tax before you’ve even earned it!

poseidon1

Some pertinent information missing here so to help others provide you with better insight, confirm the following:

1. What date did you first register your mother for self assessment and on what date did you actually file her 2024/25 tax return and was it in paper form rather than electronically?
2. Your mother should have received a notice to complete a 2025/ 26 tax return by now. What are you doing towards the completion of that tax return, to ensure you don't have the same problems now being experienced for the 2024/25 tax year?
3. In the 2023/24 tax year you indicated your mother sold a 2nd property which occassioned a large CGT bill. How was capital gains tax compliance dealt with for that year, and did your mother not receive a notice to complete a full tax return for that year also?

Your apparent confusion about what you have done on your mother's behalf by way of her annual tax compliance obligations is concerning.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82158122#Comment_82158122

Many seem to interpret payments on account in that way, but it's rarely the case - here OP is referring to two PoAs in 2026 for 2024/25 income, although the situation for 2025/26 and 2026/27 is less clear from what's been shared so far…

bring_back_threepenny_bit

Thanks for all comments so far.

As regards the points by Poseidon, prior to selling the 2nd house my mum's tax affairs were extremely straightforward, State pension and a small second pension from which tax was deducted at source and any small adjustments clawed back by HMRC the following year. The house was sold in 2023/24 and a large CGT bill paid and tax return filed. The interest earned on the remaining sale proceeds has been the main variable element of income and subsequent tax returns. I had trouble extracting the last little bit of data for the 25/26 return but am now in a position to complete it this week.

I still maintain that it is at best confusing if HMRC write that £1480 is due on 31 January and in the very same letter write that £4480 is due on the same date - especially as notice of those payments was sent 8 months after the due date.

If there is an element of payment on account based on last year's figures, this will be an over-estimate as the income from interest earned diminishes significantly each year, due to capital drawdown to meet complex and very expensive care needs.

eskbanker

The query about 2023/24 was essentially peripheral background information - the timeline (and method) of submission of the 2024/25 return remains a far more important question in the context of liabilities arising from that year…

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82158465#Comment_82158465

Yes it was the actual filing date for the 2024/25 return I was trying to nail down.

The deadline for that return was 31 January 2026 so if filed in time a statement for the tax due should have been issued in February to ensure January payments made by end of February 2026 to avoid the first 5% late payment penalty.

If tax payment remains unpaid 6 months later an additional 5% surcharge thereon, whilst the July 2026 second instalment risks 5% if also paid late after 30 days as indicated below.

In addition to the 5% surcharges, interest should have been running on late paid tax from their respective due dates, as indicated below -

https://www.gov.uk/self-assessment-tax-returns/penalties

https://www.taxez.co.uk/post/self-assessment-payment-on-account-explained

What is confusing here is the OP acknowledges just one 5% surcharge being imposed (no interest charges) and that was only charged on the the original balancing liability for 2024/25 of £2,970 with no surcharges at all on the 2025/26 payments on account.

Can only think the OP had some form of extended filing deadline that only triggered a single surcharge and no interest liabilties. If anything he seems to have got off lightly in terms of what should have been the correct penalty regime.

sherlock228

https://forums.moneysavingexpert.com/discussion/comment/82158122#Comment_82158122

that just shows you have no understanding what a payment on account relates to in terms of the period in which you physically earned the money. Compare it to PAYE and you'll be pleasantly surprised.

Understand your Self Assessment tax bill: Payments on account - GOV.UK

LukeB_92

One point from your later post that hasn't been picked up yet — the payments on account being based on a year when your mum's interest income was higher.

You can make a claim to reduce the payments on account if you have reason to believe the actual tax for 2025/26 will be lower than for 2024/25, which falling interest from capital being drawn down for care costs would support. You state the lower figure you expect the liability to be based on. Two cautions: don't reduce them below what the eventual liability turns out to be, because interest runs on the shortfall from the original January and July due dates; and filing the 2025/26 return, which you say you can now do this week, will replace the estimates with the actual figure anyway, so the timing of the two is worth coordinating.

On the appeal, a late payment penalty appeal has to show a reasonable excuse for the payment itself being late, and appeals are normally time-limited to 30 days from the penalty notice, so don't let that date pass while you gather information. Not receiving a statement, and finding it difficult to register online, are understandable, but HMRC's usual position is that tax is payable by the statutory date whether or not a statement has been received, so set those circumstances out in full with dates and evidence if you do appeal. Either way, paying the amount you accept is due will stop interest and any further late payment penalties building up while the appeal is considered.

sheramber

https://forums.moneysavingexpert.com/discussion/comment/82158570#Comment_82158570

Interest can only be calculated when payment is made as that is the relevant date it is chargeable to.