HMRC is planning to implement a new points-based system to replace automatic fines in a significant overhaul of the self-assessment tax process.
Currently, late submission of a self-assessment tax return incurs an immediate £100 fine. However, under the upcoming system, individuals will face a £200 charge after accumulating a specific number of points based on their submission history.
The new points will be assigned according to the frequency of self-assessment submissions. Those under the existing system will receive a point for late tax return submissions.
If another deadline is missed within a two-year span, an additional point and a £200 penalty from HMRC will be imposed. The transition to Making Tax Digital, a digital platform, will expand to more individuals starting April 2026, mandating its use for sole traders and landlords earning over £50,000 annually.
Under the Making Tax Digital scheme, quarterly earnings reporting is required. Missing four deadlines within two years will result in four points and a £200 fine. The Telegraph disclosed that the points system was recently introduced to 100 taxpayers in a trial run of Making Tax Digital, with plans to extend it to all self-assessment filers.
An HMRC spokesperson emphasized their commitment to assisting customers in accurate tax reporting to avoid fines. The new penalty points system aims to penalize only Making Tax Digital users who consistently miss deadlines.
The gradual implementation of Making Tax Digital will involve lowering the income thresholds, decreasing to £30,000 by April 2027 and further to £20,000 by April 2028. Individuals with self-employed income below £20,000 are currently exempt from Making Tax Digital but will need compatible accounting software to comply.
A selection of third-party Making Tax Digital-compliant products is available on the GOV.UK website. The revised deadlines under Making Tax Digital are as follows:
– April 2026: Sole traders and landlords earning over £50,000
– April 2027: Lowering income threshold to £30,000
– April 2028: Lowering income threshold to £20,000
Users are reminded that personal data may be collected for site improvement and personalized advertising, with the option to opt out anytime. By using the website, users agree to the cookie usage and related privacy practices outlined in the Privacy Notice and Terms and Conditions.