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HMRC internal manual

Self Assessment Manual

HM Revenue & Customs
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Interest, penalties and surcharge: surcharge: imposing and amending surcharge

This guidance applies to 2009-10 and earlier. Different rules apply to 2010-11 and later tax years. Guidance regarding tax years 2010-11 onwards can be found under SAM61200 onwards.

Automatic imposition

Where a taxpayer fails to make payment by the surcharge trigger date (SAM62080) the SA computer will, with the exceptions as listed below, automatically impose a surcharge. This is generally done on a monthly basis. (The surcharge run normally takes place a few days before the statement run, if a statement run takes place in that month.)

Surcharge is charged in 2 phases

  • An initial surcharge on any tax outstanding more than 28 days after the due date
  • Additional surcharge on any tax outstanding more than 6 months following the filing date

Manual imposition

You can use function APPLY SURCHARGE, available through function MAINTAIN SURCHARGE, to manually impose a surcharge. You might do this, for example, when you do not want to wait until the monthly computer run (see ‘Issue of surcharge notice SA324’ below).

Issue of surcharge notice SA324

Each month the computer will scan all taxpayer’s records and where appropriate apply a surcharge for all liabilities for which a surcharge can be charged.

The computer issues a surcharge notice, form SA324 Surcharge for late payment of tax to the taxpayer and a copy to the taxpayer’s agent where the 64-8 signal is set. The issue of the notice is not recorded on the SA system. Assume that the notice will be issued within 5 working days from the date the charge was created on the taxpayer record.

Enclosed with the notice will be a leaflet SA353 explaining the surcharge. See subject ‘Surcharge: Advising and Warning the Taxpayer’ (SAM62010).

Separate notices will generally be issued for initial and further surcharge. Only one year can appear on a surcharge notice.

If a surcharge is reduced a further surcharge notice is not issued, the taxpayer is notified of the change in the surcharge by statement of account. Where the tax is increased for example by an amended tax return, the amount of the increase has a new trigger date; a surcharge will be imposed only when the increased tax is not paid by the trigger date.

The original surcharge is not increased, a new surcharge is created for the increased amount and a further surcharge notice is issued. The only exception is where the tax is increased by a tax return overturning a determination, the original surcharge will be increased and a further surcharge notice will not be issued. This is because there is no change to the original surcharge trigger date for the increase.

If a surcharge is imposed, either manually or automatically, and it is reduced to nil before the surcharge notice is printed then the surcharge notice issued will be for nil. This could happen for example if the tax on which the surcharge is based is reduced to nil or, after manually imposing surcharge, you immediately cancel it (you may have selected the wrong taxpayer or charge).

Surcharge due date

Surcharges have a payment due date of 30 days after the issue of the notice. However for operational reasons, where the surcharge remains unpaid the debt will not appear on the ‘Outstanding Debt and/or Return’ Work List until after 35 days after the date the charge was created on the taxpayer’s record.


Interest will be charged on surcharge from 35 days (by concession) after the issue of the notice to the date for payment.


Surcharge will not be imposed where

  • Tax-geared penalties have been raised. In practice it will generally be the case that surcharge has already been imposed before such penalties are judged appropriate. Where a surcharge has been imposed and you wish to apply tax-geared penalties you should cancel the surcharge before tax-geared penalties are imposed
  • Liabilities have been transferred back from PAYE. Where an SA underpayment has been transferred to PAYE to be included in the tax code, but the full amount is not collected through the code, the outstanding balance is clerically transferred back to SA
  • The BY/VA signal is set
  • A remission in whole or part has been posted against the year of liability being reviewed (but any surcharge imposed prior to remission will remain)
  • The taxpayer is RLS
  • The TTP signal is set (if the TTP signal is later unset surcharge will be charged from the original surcharge trigger date (SAM62080)
  • Tax is stood-over either formally or informally. If surcharge has already been imposed and the tax is formally stood-over the surcharge will automatically be reduced to nil

Cancelling and amending surcharge

You can cancel surcharge, for example following a successful appeal, using function MAINTAIN SURCHARGE. Note: You cannot reinstate a surcharge once cancelled.

Note: Whenever you cancel a penalty, you must make an SA Note showing the reason for cancellation.

Surcharge is automatically reduced, by overnight batch process, when the underlying tax is reduced. But when you unlog a captured return (and effectively reduce the balancing charge to nil) you must manually cancel any surcharge already raised.

Where the underlying tax is increased and the amount of the increase has a new trigger date a separate notice for the surcharge due will be issued if unpaid.