If you start working for yourself and do not tell HMRC by 5 October after the end of the tax year, you can be charged a failure to notify penalty. The penalty is a percentage of the tax still unpaid on 31 January after that tax year, so registering late but paying in full by that date leaves nothing to penalise. Where tax is unpaid, the percentage depends on why you were late and whether you came forward before HMRC found you.

What is the deadline for registering as self employed?

Section 7 of the Taxes Management Act 1970 requires anyone who is chargeable to Income Tax for a tax year, and has not been sent a notice to file a return, to tell HMRC within six months of the end of that year. Because the tax year ends on 5 April, the deadline is 5 October. For the 2025 to 2026 tax year (6 April 2025 to 5 April 2026) the deadline was 5 October 2026. HMRC’s Compliance Handbook at CH71240 treats the failure as happening on the day after the deadline, so anyone who has not registered for that year was already in default on 6 October 2026.

GOV.UK says a sole trader must send a return if they earned more than £1,000 from self employment in the tax year, before deducting expenses. The obligation is annual (CH71280): someone who traded for three years without telling HMRC has three separate failures, one for each year, and each is looked at on its own. The general steps for starting out are covered in registering as self employed and registering for Self Assessment; this page deals with what happens once the deadline has passed.

Is registering late a penalty in itself?

No. The penalty under Schedule 41 to the Finance Act 2008 is charged on the potential lost revenue, which paragraph 7(2) defines for Income Tax as the tax for the year that, because of the failure, is unpaid on 31 January following the tax year. HMRC’s own example at CH72700 works out the penalty base as the liability on the return less a payment made before 31 January.

So for 2025 to 2026, someone who registers in November 2026, files promptly and pays the whole bill by 31 January 2027 has no potential lost revenue and no failure to notify penalty, even though they registered late. Under section 62(2) of the Finance Act 2004, CIS deductions taken by contractors count as Income Tax paid, so a construction subcontractor’s deductions also reduce the unpaid amount.

Registering after 5 October does change the filing deadline. GOV.UK says that if you register after 5 October 2026, HMRC will give you a deadline three months from the date of its letter or email, but the tax must still be paid by 31 January 2027. Late filing and late payment penalties are separate charges; see Self Assessment late payment penalties.

How does HMRC set the penalty percentage?

HMRC first decides the behaviour behind the failure. Factsheet CC/FS11 describes three types: non deliberate; deliberate but not concealed, where you knew you should tell HMRC and chose not to; and deliberate and concealed, where you also took active steps to hide it. It then decides whether your disclosure was unprompted or prompted. Schedule 41 paragraph 13 sets these ranges:

Behaviour Maximum Unprompted minimum Prompted minimum
Non deliberate, HMRC aware within 12 months of tax first becoming unpaid 30% 0% 10%
Non deliberate, 12 months or more 30% 10% 20%
Deliberate but not concealed 70% 20% 35%
Deliberate and concealed 100% 30% 50%

The 12 months run from when the tax first becomes unpaid because of the failure, not from the 5 October deadline (paragraph 13(3)). CH73180 confirms that the minimum for an unprompted, non deliberate failure disclosed within that window is nil.

A non deliberate failure is not penalised at all if you had a reasonable excuse and put things right without unreasonable delay once it ended (paragraph 20). Lack of money is not an excuse unless caused by events outside your control, and relying on someone else only counts if you took reasonable care. More on this is in HMRC reasonable excuse.

What makes a disclosure unprompted?

A disclosure is unprompted if you make it when you have no reason to believe HMRC has discovered, or is about to discover, the failure (CH73120). Anything else is prompted, and there is no halfway position. Once HMRC has started a check, CC/FS11 says a disclosure can only be unprompted in exceptional cases, where it concerns something unrelated to the check that HMRC could not have found during it. A disclosure still counts as unprompted if you come forward before you know the full figures, as long as you provide them within a reasonable time.

How do telling, helping and giving reduce it?

Within the range, the penalty falls according to the quality of your disclosure. CC/FS11 gives up to 30% of the available reduction for telling HMRC about the failure, up to 40% for helping (answering questions, replying quickly, checking your own records) and up to 30% for giving access to records. HMRC multiplies the gap between the maximum and minimum by your total reduction and takes the result off the maximum.

For deliberate failures, CH73360 says HMRC will normally cut the available reduction by 10 percentage points if you take more than three years to come forward. For non deliberate failures it does not apply that cut, because the higher minimum after 12 months already reflects the delay.

What does this look like in figures?

Illustration only. Priya starts trading as a self employed designer in June 2025 and does not register by 5 October 2026. She realises her mistake herself and registers on 1 December 2026. Her return shows £4,000 of tax for 2025 to 2026 and she pays £1,000 by 31 January 2027.

  • Potential lost revenue: £4,000 less £1,000 = £3,000.
  • Behaviour: non deliberate. Disclosure: unprompted and well within 12 months, so the range is 0% to 30%.
  • HMRC allows 80% for quality of disclosure: 30 × 80% = 24 points off, leaving 6%.
  • Penalty: £3,000 × 6% = £180. Had she paid the full £4,000 by 31 January 2027, it would have been nil.

If instead HMRC had found her in 2028, the disclosure would be prompted and more than 12 months late, so the range is 20% to 30%. With a 70% quality reduction the rate is 30% minus 7 points, or 23%, giving £690. That is the calculation CC/FS11 uses in its own example.

What should you do if you have missed the deadline?

  1. Register straight away; delay can turn a nil penalty into a charged one.
  2. File the return by the deadline HMRC gives you.
  3. Pay as much as you can by 31 January, because only tax unpaid on that date is penalised.
  4. If earlier years were also missed, deal with each year; the digital disclosure service page covers disclosing older income.
  5. Write down the reasons you were late while they are fresh, in case they amount to a reasonable excuse.

If you disagree with a penalty, CC/FS11 explains that within 30 days you can give the officer new information, ask for a review by an HMRC officer not previously involved, or appeal to the tribunal.

What mistakes make the penalty bigger?

  • Waiting for HMRC to make contact, which turns an unprompted disclosure into a prompted one.
  • Registering late and then missing the 31 January payment, which creates potential lost revenue.
  • Assuming an adviser has registered you without checking; reliance only helps if you took reasonable care.
  • Ignoring earlier years. Each year is a separate failure, and older ones are more likely to fall outside the 12 month window.
  • Giving incomplete answers once HMRC is involved, which cuts the helping reduction.

The wider rules for all taxes are in HMRC failure to notify penalties, and construction workers should also read how the Construction Industry Scheme works.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.