HMRC plans to introduce a new points-based system to replace automatic fines as part of significant changes to the self-assessment tax procedure. Currently, individuals face an immediate £100 penalty for late submission of their self-assessment tax return. Under the upcoming system, a £200 charge will be levied after accumulating a set number of points based on the frequency of self-assessment submissions. Participants in the existing self-assessment scheme will receive a point for late tax return submissions. If the deadline is missed again within two years, an additional point and a £200 fine from HMRC will be imposed.
The implementation of Making Tax Digital, a digital platform, will expand to include more individuals starting in April 2026. Sole traders and landlords with annual incomes exceeding £50,000 will be mandated to utilize this new tax reporting system. As part of this system, earnings must be reported quarterly, and failing to meet deadlines on four occasions within two years will result in four points and a £200 fine.
Recent reports from The Telegraph indicate that a trial points system has been initiated for 100 taxpayers under Making Tax Digital. This system will eventually be extended to all self-assessment filers. An HMRC spokesperson emphasized the focus on assisting clients in accurate tax reporting to avoid penalties. The spokesperson stated that the new penalty points system will ensure that only Making Tax Digital users consistently missing deadlines will face financial consequences.
The expansion of Making Tax Digital will gradually encompass lower income brackets, with the threshold decreasing to £30,000 from April 2027 and further to £20,000 from April 2028. Individuals earning below £20,000 through self-employment are currently exempt from Making Tax Digital requirements, provided they use compatible accounting software for compliance.
A range of third-party Making Tax Digital-compliant products is available on GOV.UK. The revised deadlines for Making Tax Digital implementation are as follows: [List of deadlines can be found on the GOV.UK website].
