HMRC to introduce new ‘penalty points’ system in 2026 | EUROtoday

HMRC is rolling out a brand new “penalty points” system this month that might land forgetful taxpayers with a £200 superb.

The new system proposed by the tax authority in 2024 is about to return into impact from this yr, starting with a trial of round 100 taxpayers as a part of the Making Tax Digital scheme.

Under the present guidelines, those that miss the 31 January self-assessment submission deadline get an automated £100 superb. This can improve by £900 after three months (£10 a day), then one other £300 after six months.

The new system will see many sole merchants given quarterly deadlines to file updates, after which an end-of-year “final declaration” which is able to change the present self-assessment tax return.

Each late quarterly submission will earn one penalty level as a substitute of an automated superb, with 4 factors (or 4 missed quarterly deadlines) leading to a £200 superb.

Meanwhile, every late annual submission may even end in one penalty level, however the threshold is decrease, at two factors (or two missed annual deadlines), which may even end in a £200 superb.

While this method will have an effect on solely a small variety of individuals to start with, it’ll start to be rolled out absolutely from April 2026 for sole merchants and landlords with annual self-employment and property earnings over £50,000. This threshold will probably be decreased annually, to £30,000 in 2027, and £20,000 in 2028.

The quarterly penalty factors system won’t apply within the first yr of the scheme, which begins in April, to present merchants time to adapt.

HMRC defined in a paper on the modifications: “The new penalty regime is simpler and fairer than the previous system. The new system will penalise those who persistently do not comply by missing filing and payment deadlines, while being more lenient on those who occasionally fail to meet obligations.”

An HMRC spokesperson informed Sky News: “We’re committed to helping customers get their tax right to avoid fines altogether. Our fairer penalty points system for late returns will mean that only Making Tax Digital customers who persistently miss deadlines will incur a financial penalty.”

HMRC revealed final week that 3.3 million individuals nonetheless had but to file their self-assessment tax return, with only a week to go till the 31 January deadline.