Just under 1.6 million taxpayers were hit with fines or penalties for their self-assessment tax return in the 2021/22 financial year, a new freedom of information (FOI) request submitted by AJ Bell has revealed.

The investment platform said the figure illustrates the challenges faced by taxpayers navigating the UK’s tax system and provides a “reminder of the importance of hitting self-assessment deadlines”.

Today (31 July) marks the HMRC deadline for payments on account for self-assessment tax bills.

In the 2021/22 financial year, which was the latest data available under the FOI, 1.4 million taxpayers were charged interest for paying their tax bills late while a further 280,000 people paid penalties for filing their return late. Some paid both, with 90,000 taxpayers hit with late filing penalties and interest.

Around £188m has been paid to HMRC in fines and interest so far for this period, with the average late filing penalty standing at £350.

However, AJ Bell warned that these figures are likely to be revised upwards, similar to previous years – based on revisions for 2019/20 and 2020/21 – which could mean the average penalty again exceeds £500 in 2021/22.

Director of personal finance at AJ Bell, Laura Suter, commented: “Anyone who makes payments on account for their self-assessment tax bill, or who wishes to make an advance payment, has until midnight on 31 July to cough up the money or risk drifting closer towards a hefty penalty on top of what they already owe.

“Anyone hit with interest on their tax bill will find it has shot up, as it’s based on base rate plus 2.5% – meaning it is now 7.75%. This has risen from 2.6% at the start of 2022, resulting in a more punitive system that rakes in even more money for the Government from taxpayers.”

Suter also warned that as the Government drags more people into paying tax via self-assessment, the UK will start to see more taxpayers hit by these penalties.

She added: “With the tax-free allowance on capital gains and dividend taxes being dramatically cut in the past two years, more people will have to file a tax return for the first time in their lives.

“Clearly some people are going to struggle to complete the return, or may not even realise they have to file one in the first place. You only have to look at the number of people calling HMRC and the volume of those that go unanswered to see the struggles that lots of taxpayers have.”

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