HMRC will introduce a new points system to replace automatic fines in a significant overhaul of the self-assessment tax process. Currently, a £100 fine is imposed for late submission of self-assessment tax returns, but under the upcoming system, individuals will face a £200 charge after accumulating a specified number of points.
The points will be assigned based on the frequency of self-assessment submissions, with late filers under the existing system receiving a point. If the deadline is missed again within a two-year span, another point and a £200 fine from HMRC will be levied.
The implementation of Making Tax Digital, a digital platform expanding to more taxpayers starting April 2026, will mandate sole traders and landlords earning over £50,000 annually to adopt the new tax reporting mechanism. Under this system, quarterly earnings reporting is required, and failure to meet deadlines four times in two years will result in four points and a £200 penalty.
The Telegraph disclosed that the points system has been piloted this month with 100 taxpayers under Making Tax Digital, with plans to extend it to other self-assessment filers. An HMRC spokesperson emphasized a commitment to assisting customers in accurate tax submissions to avoid fines, noting that penalties will be incurred only by Making Tax Digital users persistently missing deadlines.
Making Tax Digital will gradually encompass lower income thresholds, decreasing to £30,000 in April 2027 and further to £20,000 in April 2028. Individuals with self-employed income below £20,000 are currently exempt from Making Tax Digital but will require compatible accounting software for compliance.
A range of third-party Making Tax Digital-compliant products is available on the GOV.UK website. Updated deadlines under Making Tax Digital are provided for reference.