Penalties for Late Payment of Devolved Taxes Explained

Penalties for late payment of devolved tax in Wales

If Welsh devolved tax is not paid by the relevant penalty date, the taxpayer may face an extra penalty on top of the tax due. The penalty is based on the amount still unpaid and the rate depends on whether the tax is land transaction tax or landfill disposals tax.

• A late-payment penalty can apply if devolved tax remains unpaid by the relevant penalty date.
• For land transaction tax, the penalty is 5% of the unpaid amount.
• For landfill disposals tax, the starting penalty is 1% of the unpaid amount.
• For landfill disposals tax, different rules may apply for a second or later failure within a specified penalty period.
• To work out the penalty, identify the tax type, the amount unpaid, and whether it was still unpaid by the penalty date.
• The extract does not fully explain key details such as the exact penalty date, repeat-failure rules, or how part-payments are treated.

Scroll down for the full analysis.

Penalties for late payment of devolved tax in Wales

This page explains when a taxpayer becomes liable to a penalty for not paying devolved tax on time under the Welsh rules, and how the amount of that penalty is worked out. The source material is brief, but the practical point is important: if tax remains unpaid by the relevant penalty date, a percentage-based penalty can arise in addition to the tax itself.

What this rule is about

The rule deals with penalties for failing to pay devolved tax by the required date. In the material provided, this covers land transaction tax and landfill disposals tax. The basic idea is simple: if an amount of tax is still unpaid on or before the relevant penalty date for that amount, a penalty may be charged.

This is a late-payment penalty. It is separate from the tax itself. So even if the underlying tax remains due and payable, the penalty is an additional amount triggered by non-payment by the required time.

What the official source says

The official material says that a taxpayer is liable to a penalty if they have failed to pay an amount of devolved tax on or before the penalty date for that amount.

It then sets out the amount of the penalty for different devolved taxes:

• For land transaction tax, the penalty is 5% of the unpaid tax.
• For landfill disposals tax, the penalty is 1% of the unpaid tax, unless the failure is the second or a later failure to pay landfill disposals tax within a specified penalty period.

The source provided does not set out the detailed definition of the penalty date or the specified penalty period. Those points matter in practice, but they are not explained in the extract itself.

What this means in practice

For land transaction tax, the immediate practical message is that if any tax remains unpaid by the relevant penalty date, the penalty is calculated as 5% of the amount still unpaid.

This means the size of the penalty depends on the unpaid tax, not on a fixed fee. A larger unpaid amount produces a larger penalty.

For landfill disposals tax, the starting position is a 1% penalty on the unpaid amount. However, the source expressly warns that a different result may apply where there has already been a second or later failure to pay within a specified penalty period. That suggests a repeat-failure regime, but the exact consequences are not given in the extract.

In practical terms, the first questions are:

• What amount of tax was due?
• What amount remained unpaid?
• What was the relevant penalty date for that amount?
• For landfill disposals tax, is this a first failure or a repeat failure within the relevant period?

How to analyse it

A sensible way to analyse the position is to work through the issue in stages.

• Identify the tax in question. The rate differs between land transaction tax and landfill disposals tax.
• Identify the amount of tax that should have been paid.
• Check what amount, if any, was still unpaid by the penalty date.
• Apply the correct percentage to that unpaid amount.
• If the tax is landfill disposals tax, check whether the failure falls within a repeat-failure regime during a specified penalty period.

This approach matters because the penalty is tied to an unpaid amount of tax, not simply to a return being filed late or to a general compliance failure. The timing of payment is central.

Example

Illustration: a taxpayer has £10,000 of land transaction tax to pay. If £2,000 remains unpaid by the relevant penalty date, the penalty under the rule in the source material is 5% of £2,000. That produces a penalty of £100.

Illustration: a taxpayer has an amount of landfill disposals tax unpaid by the penalty date. On the facts given in the source extract, the starting point is a penalty of 1% of the unpaid amount. But if this is the second or a later failure within the specified penalty period, the position may differ. The extract does not provide the full detail needed to calculate that further consequence.

Why this can be difficult in practice

The main difficulty in the supplied material is that it states the penalty trigger and the percentage rates, but not the full surrounding machinery.

In particular, the extract does not define:

• the exact penalty date for a given amount of tax
• how part-payments are treated over time
• what counts as the second or subsequent landfill disposals tax failure
• the meaning of the specified penalty period

That means the broad rule is clear, but the detailed application may still depend on other provisions. A reader should be careful not to assume that every late payment issue can be resolved from this extract alone.

Key takeaways

• A penalty can arise if devolved tax is not paid by the relevant penalty date.
• For land transaction tax, the penalty in the source material is 5% of the unpaid tax.
• For landfill disposals tax, the starting penalty is 1% of the unpaid tax, but repeat failures within a specified period may be treated differently.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Penalties for Late Payment of Devolved Taxes Explained

View all WRA LTT Guidance Pages Here