HMRC plans points-based penalties for Self-Assessment

May 2, 2023
Stephen is one of the firm’s tax partners. He specialises in income tax, capital gains tax, corporation tax, inheritance tax, and stamp duty land tax. He also specialises in advising property and construction businesses.
points based penalties self assessment

HMRC have announced that from April 2026, the existing penalty system for late filing of tax returns under Self-Assessment will be amended to a points-based system for self-employed people and landlords with turnover above £50,000.  This coincides with those individuals being required to comply with their tax filing obligations via the ‘Making Tax Digital’ system.

HMRC say that the new system will focus on penalising individuals who consistently miss the filing deadline and encourage those who miss the occasional deadline to improve their compliance behaviour.

How will the new system work?

The new system will be based on points, which will be issued every time a deadline is missed.  For each deadline an individual misses, they will be issued with 1 point. A fine of £200 will be issued once a certain level of points is reached (2 points for annual submissions, 4 points for quarterly submissions and 5 points for monthly submissions) and points will expire 2 years from the month after they were issued. The aim of this approach is to encourage those who occasionally miss deadlines to improve their future compliance and avoid the increased fines.

Full details of the regime are yet to be confirmed by HMRC.

What impact will this have?

We believe that this new system will have a positive impact as those that only miss deadlines occasionally will not be punished as harshly as persistent offenders. At Hawsons, we would always recommend using a specialist tax adviser to submit your tax return. This to ensure that you meet all deadlines, ensure your return is accurate and claim all available tax reliefs.  If you would like assistance with your return, please contact us to speak to one of our specialist tax advisors.

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Tax Partner, Sheffield

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Senior Tax Manager, Sheffield

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