All change - HMRC points-based penalties for self-assessment are coming

First published on 25 April 2023 by Alastair
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For years, we’ve been accustomed to advising our clients that anyone who submits their self-assessment tax return after the deadline that they will receive a standard fine of £100. Now, from 6th April 2026, those who have inadvertently missed the deadline or for whatever reason have only missed it by a short time, will get a smaller fine than those who persistently (and perhaps wilfully) fail to file their accounts on time.

Essentially, the change is from a blanket cut-off point and standard fine to a points-based system. Penalties will be based on the length of time the tax is outstanding so the earlier an overdue tax payment is made, the lower the fine.  On the other hand, those who miss a filing deadline will initially be given a point, with a fine only issued once a set number of points is reached.  The more deadlines you miss, the more points you’ll accumulate.

For example, if you make a payment within 30 days, you’ll will have a lower penalty charge than one made after 30 days. HMRC says this is to encourage those who can pay to do so, while taking appropriate action against persistent non-compliance.

It is expected that this change will only affect the 5% of non-compliant taxpayers.

That said, this change is expected to raise £155m in penalties according to the Budget Red Book calculations issued in March 2023.

Full details are available on the government website, here.  It must be said that there is quite a lot to take in with these changes, so if you are in any way unsure, please feel free to contact us at this link.

Vivian Linstrom, M&S Accountancy and Taxation Ltd

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