HMRC plans to introduce a new points-based system to replace automatic fines in a significant overhaul of the self-assessment tax process. Currently, if you file your self-assessment tax return late, you face an immediate £100 penalty. However, under the upcoming system, you will incur a £200 charge after accumulating a specific number of points.
The number of points assigned will depend on how frequently you are required to submit your self-assessment. Individuals on the existing self-assessment scheme will receive a point for late submission of their tax return. If the deadline is missed again within a two-year span, an additional point and a £200 fine from HMRC will be imposed.
Starting April 2026, the Making Tax Digital initiative will be expanded to encompass more individuals. Sole traders and landlords earning over £50,000 annually will be mandated to utilize the new digital tax reporting platform.
Under Making Tax Digital, income reporting will occur quarterly. Missing four deadlines within two years will result in four points and a £200 penalty. The Telegraph disclosed that the points system was recently implemented for 100 taxpayers participating in a Making Tax Digital trial and will be extended to other self-assessment filers.
An HMRC spokesperson stated, “We are dedicated to assisting customers in accurately fulfilling their tax obligations to avoid fines entirely. Our revised penalty points structure for late submissions ensures that only Making Tax Digital participants who consistently miss deadlines will face financial penalties.”
Gradually, Making Tax Digital will encompass lower income brackets, with the threshold set to decrease to £30,000 by April 2027 and further to £20,000 by April 2028. Currently, individuals with self-employment income below £20,000 are exempt from Making Tax Digital requirements, provided they use compatible accounting software.
A range of third-party Making Tax Digital-compliant products is available on the GOV.UK website. The revised deadlines for Making Tax Digital compliance are as follows:
– [List of deadlines]
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