HMRC is planning to implement a new points system to replace automatic fines, signaling a significant overhaul of the self-assessment tax process. Currently, a £100 penalty is imposed for late submission of self-assessment tax returns, but the upcoming system will levy a £200 charge upon accumulating a specific number of points.
The points allocation will be tied to the frequency of self-assessment submissions. Participants in the existing self-assessment setup will accrue a point for late tax return submission. If the deadline is missed again within a two-year span, another point will be assigned along with a £200 fine from HMRC.
Scheduled for broader implementation starting April 2026, Making Tax Digital is a new digital platform that will be mandatory for sole traders and landlords earning over £50,000 annually. Under this system, income reporting will be required four times per year, with the accumulation of four missed deadlines resulting in four points and a £200 penalty.
According to The Telegraph, the points system was recently introduced to 100 taxpayers participating in a Making Tax Digital trial. The initiative is expected to extend to other self-assessment filers in the near future.
An HMRC spokesperson emphasized a commitment to assisting customers in accurate tax filing to avoid fines altogether. The revised penalty points system aims to penalize only Making Tax Digital users persistently missing deadlines.
The gradual expansion of Making Tax Digital will encompass lower income thresholds, reducing to £30,000 in April 2027 and further to £20,000 in April 2028. Individuals with self-employed income under £20,000 are currently exempt from using Making Tax Digital and must utilize compatible accounting software for compliance.
A selection of third-party Making Tax Digital-compliant products is available on GOV.UK. The revised deadlines for Making Tax Digital compliance are outlined on the platform, reflecting the evolving landscape of taxation regulations.