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

Tomas made two payments on account for 2025/26 of £6,000 each. His self-assessment shows the final income tax liability is £15,000, so a balancing payment of £3,000 was due on 31 January 2027. He paid it on 20 March 2027, 48 days late. Interest aside, what is the late payment penalty on the balancing payment?

The penalty is £150. Only the £3,000 balancing payment was late, and being more than 30 days late triggers a 5% penalty, giving £150. The five-month penalty has not been reached, and the on-time payments on account attract no penalty.

  1. A£0
  2. B£150Correct
  3. C£450
  4. D£180

Explanation

The late payment penalty applies to the unpaid balancing payment of £3,000, not the full liability. Payment was more than 30 days late but less than five months, so a 5% penalty applies: £3,000 x 5% = £150. The payments on account were made on time and carry no penalty. £450 wrongly applies 5% to the £9,000 total, or 15 percent.

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