What Happens If You Report Capital Gains Late to HMRC?

A £10,000 share gain and £1,260 of tax

Say you bought 1,000 shares in Company A for £5 each in June 2020 and sold them all for £15 each in the tax year. The gain is £10,000. After the £3,000* annual exempt amount, the tax-free allowance everyone gets each year, £7,000 is taxable.

You have £30,000 of other taxable income, which leaves £7,700 of your basic rate band, the slice of income taxed at the lower rate. The whole £7,000 is taxed at 18%*, so the tax is £1,260.

* Correct at the time of writing. Rates and allowances can change, so check HMRC's current Capital Gains Tax rates and tax-free allowance on GOV.UK.

The return and the tax are both due by 31 January after the tax year ends. For 2025–26, that's 31 January 2027. HMRC must receive both by then. Our guide to reporting capital gains on the SA108 pages covers who has to file and how.

To keep the example simple, the return and the payment are late by the same amount each time. Interest uses 7.75%, HMRC's rate from 9 January 2026, on the tax only. It is the Bank of England base rate plus 4%, and it moves when the base rate does. HMRC's own figures will differ slightly from these.

A month late

HMRC charges a £100 penalty as soon as you miss the filing deadline. There is no late payment penalty yet, because that applies to tax still unpaid at 30 days. You also pay interest on the £1,260.

Two months late

Once the tax is still unpaid at 30 days, a late payment penalty of 5% of the unpaid tax applies. On £1,260, that's £63. The filing penalty stays at £100 for now, because the daily penalties don't start until 3 months.

Just over six months late

After 3 months, HMRC adds £10 a day, up to a maximum of £900. That maximum takes 90 days, so it's reached at about the 6-month point. At 6 months there's a further filing penalty of 5% of the tax or £300, whichever is greater. Here 5% is only £63, so it's £300. A second 5% late payment penalty applies too.

Twelve months late

At 12 months there's another filing penalty of 5% or £300, whichever is greater, and a third 5% late payment penalty. The filing penalties have now reached their usual maximum of £1,600.

That total is the usual case. At 12 months the penalty is higher if HMRC finds you deliberately withheld information. Under the law it can be 70% of the tax if the withholding was deliberate, and 100% if you also concealed it. That's a reason to speak to an adviser.

If you have no tax to pay

You can owe penalties without owing any tax. Say a sale left you with a gain under the £3,000* allowance, but you sold more than £50,000 of shares in the year, which means you still had to file. If the return is late, the filing penalties still apply.

The £100 applies even when there's no tax to pay. The law sets the 6-month and 12-month penalties at the greater of 5% of the tax and £300, so with no tax the figure is £300 each time. That's up to £1,600 in filing penalties on a return that would have shown nothing to pay. There are no late payment penalties and no interest, because there's no tax to be late with.

* Correct at the time of writing. Rates and allowances can change, so check HMRC's current Capital Gains Tax rates and tax-free allowance on GOV.UK.

If you never registered for Self Assessment

If you didn't already file returns, you had to register for Self Assessment, which you must do by 5 October after the tax year ends. If you register after 5 October following the tax year and still have tax unpaid at 31 January, HMRC can charge a failure to notify penalty. It's based on the tax unpaid, and the filing and payment penalties above are separate.

How to reduce or appeal a penalty

You usually have 30 days from the date the penalty was issued to appeal. If you miss that, you'll need to give a reason for the delay. Follow the instructions on the penalty letter. Or write to HMRC with your name, your Unique Taxpayer Reference (the number HMRC gave you for Self Assessment), and the dates and reasons your return or payment was late.

A penalty can be cancelled if you had a reasonable excuse, meaning something that stopped you meeting the deadline. HMRC's examples include a close relative dying shortly before the deadline, a serious illness or hospital stay, and a computer or software failure. HMRC's online service failing is on the list, and so is relying on someone else to file who didn't. You must still file or pay as soon as you're able.

HMRC's list of things that don't count includes not having enough money to pay, finding HMRC's online service difficult, not getting a reminder from HMRC, and mistakes on the return. HMRC also has a power to reduce a filing penalty in special circumstances, at its discretion. If it agrees a payment plan with you, that can affect late payment penalties.

Appealing has a cost if it fails. If HMRC rejects the appeal, you pay interest on the penalty from the date it was due, which is why HMRC says to consider paying it while you appeal.

If you can't pay the tax itself, you may be able to set up a payment plan. HMRC checks it's affordable, and if you can't agree one, it asks for the full amount.

Several years of unfiled returns, an HMRC enquiry, or a penalty you plan to dispute is the point to talk to a regulated tax adviser. So are large gains, trusts and non-residence.