The Treasury has issued a stark update on HM Revenue and Customs' (HMRC) crackdown on unpaid taxes, as the critical January 31 deadline for self-assessment returns approaches. Officials warn that nearly 5.65 million individuals and businesses are yet to submit their forms, risking immediate penalties.
Millions at Risk of Steep Fines
According to the latest figures, while over 6.36 million taxpayers have already filed, a significant portion remain non-compliant. Those who miss the January 31, 2026, deadline will face an initial £100 penalty. This fixed charge applies even if no tax is owed or if the tax due is paid on time.
The financial consequences escalate quickly for continued non-compliance. After three months, daily penalties of £10 can be imposed, accumulating to a maximum of £900. Further punitive charges of 5% of the tax owed or £300 (whichever is greater) follow at six and twelve months. Late payment also incurs separate 5% penalties on the unpaid tax at 30 days, six months, and twelve months, plus interest.
Government Outlines HMRC's Pursuit of Unpaid Tax
The update came in response to a parliamentary question from Conservative MP for Isle of Wight East, Joe Robertson, who asked what assessment HMRC had made of those liable for tax but not being actively pursued. Dan Tomlinson, the Labour MP for Chipping Barnet and Exchequer Secretary to the Treasury, provided the detailed reply.
Tomlinson emphasised HMRC's commitment to closing the tax gap, stating its compliance work contributed to record tax revenues of £875.9 billion in 2024-25, protecting £48 billion that would have gone unpaid. He outlined a three-stage process for debt collection: initial contact via phone and letter campaigns, the use of private sector debt collection agencies, and, for persistent cases, enforcement powers including taking control of goods, county court proceedings, and insolvency applications.
Key Dates and Rules for Taxpayers
HMRC rules state that taxpayers needed to inform the revenue service by October 5, 2025, if they were required to complete a return for the 2024 tax year and were either first-time filers or did not send one for 2023-24. Those who registered after that date will have a different filing deadline, typically three months from notification, but must still pay any tax owed by January 31, 2026, to avoid penalties.
Tomlinson highlighted that measures announced in recent fiscal events, including the Autumn Budgets of 2024 and 2025 and the Spring Statement 2025, are projected to raise an additional £10 billion by 2029-30 by tackling non-compliance, evasion, and avoidance.
The Treasury's message is clear: with the deadline imminent, taxpayers must act now to file their returns and settle their bills to avoid a costly and escalating penalty regime.
