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ACCA Applied Skills · Taxation (UK) · Penalties for non-compliance

Priya has an income tax balancing payment of £8,000 for 2025/26 that was due on 31 January 2027. She pays the full amount on 20 March 2027. What late payment penalty is charged on the balancing payment?

The penalty is £400. The £8,000 balancing payment was still unpaid 30 days after its 31 January 2027 due date, so a 5% penalty applies. The next 5% would only arise at six months after the due date, and she paid before that.

  1. A£0
  2. B£400Correct
  3. C£800
  4. D£1,200

Explanation

The tax was still unpaid 30 days after the due date (2 March 2027), so a penalty of 5% applies: £8,000 × 5% = £400. The second 5% only arises if the tax is still unpaid six months after the due date (31 July 2027), so £800 is wrong. Nothing is charged for the 12-month stage because she paid before it.

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