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A guide to the changes to penalties for late self-assessment tax returns and tax payments

The government is working to reform the penalties system for late return of tax returns and late tax payments. This guide provides a description of the coming adjustments to penalty penalties relating to Income Tax Self-Assessment (ITSA).

Which are the penalties currently in place for late self-assessment return as well as late tax payments?

The current penalties for tax return for self-assessment late is the following:

  • A day overdue A fixed and automatic penalty of £ 100 that is applicable even if there is no tax due or the tax due was paid in time.
  • 3 months behind: £ 10 per day with a maximum of £ 900 in 90-day time.
  • Six months in late £ 300 or 5 percent of tax owed, or whichever the greater amount.
  • Twelve months overdue the tax due is either £ 300, or five% of tax due, or whichever greater.

If the denial of information after a period of more than 12 months has been done so deliberately or is a cover-up, additional penalties could be imposed.

Taxes due for late payment the rules in effect are:

  • 30-day late the tax due is 5%. tax due.
  • Five months or more after the penalty first imposed 5 percent of the tax that is due on that time.
  • More than 11 months following the initial penalty 5 percent of the tax owed to the date of that penalty.

What are the penalties for late self-assessment return and tax payment lateness changing?

The Government first announced a reform of penalties for late submission in the Spring 2021 budget announced by current the Chancellor Rishi Sunak. The new system is a shift to a point-based system and reforms begin with the VAT and Income Tax Self-Assessment (ITSA).

In announcing the changes, an HMRC spokesperson said to that Account Ease: “We are reforming penalties to make them fairer, more effective and consistent across taxes with the focus on taxpayers who persistently miss filing and payment deadlines, rather than those who occasionally slip-up.”

When will penalties for late self assessment returns and tax due late change?

A new system of penalty for VAT returns that are late and payment has already been implemented. Self-assessment will be implemented in April 2026.

It is tied to the gradual introduction of Making Tax Digital (MTD) for income Tax Self-Assessment (ITSA) which obliges self-employed and business-owned individuals, as well as landlords and landlords to maintain digital records and utilize MTD-compliant software for submitting the latest information to HMRC.

Self-employed and business owners and landlords who earn greater than £ 50,000 will be required to join the first time in April 2026.

The rules will be applicable to those earning over£ 30,000 as of April 2027.

For those with low income letter to Parliament is required. Victoria Atkins, Financial Secretary to the Treasury and Treasury, stated: “The Government will now examine the requirements of small firms, specifically those who aren’t in the £ 30,000 limit. The review will look at how and if you can make the Making Tax Digitalfor income Tax Sellf-Assessment is able to be tailored to meet the requirements of small-sized businesses as well as the most effective method for them to fulfill their income Tax obligation.”

What will the new penalties for late submissions in self-assessment be handled?

Under the new system points will be awarded each time an self-assessment tax returns submission date is not met. When a certain number of points is met the £ 200 fine will be imposed. Another £ 200 fee will be assessed for each late submission, however the total points for taxpayers does not rise.

The thresholds for penalty will be in the following manner:

Submitting frequency Percentage of points for penalty
Annual returns 2
Quarterly returns 4
Monthly returns 5

When a penalty threshold has been met, the points are set to zero when all tax returns have been completed on time within the time that HMRC defines as an “period of compliance”.

The timeframes for compliance are in the following order:

Submitting frequency Time to comply
Annual 24 months
Quarterly 12 months
Monthly 6 months


What will the new late penalties for self-assessment and payment be implemented?

The new system imposes the first penalty, which is followed by a subsequent penalty if the balance remains overdue.

A penalty is not due if the taxes are paid in first 15 days from when the tax due date is. The first penalty will be assessed when the tax is due by more than 16 days. Another penalty will be imposed when the payment is more than 31 days late.

The first penalty is the amount is 22% of tax due on day 15. Second penalty: 22% of tax due on day 15 and 2% of tax owed on day 30.

More details are available in a policy document issued by the Government here.

The advantages of filing your self-assessment tax return earlier

To avoid penalties, it is important to complete your tax return on time and make your tax payments in time.

Although you are able to file your tax return until 11.59pm on the day of deadline There are numerous benefits of filing your tax return early. These include:

  • You could be eligible for an income tax refund due to various reasons like excessive amounts on a account based on previous year’s earnings. The earlier your tax return is filed, the quicker any tax refunds you’re due will be processed.
  • Making your tax return in the early hours can allow you to manage the cash flow of your business. Knowing what the tax bill will cost in advance can help you plan your budget to plan how you’ll be in a position to pay it.
  • Making sure your tax return is completed will allow you to work on expanding your company.

For more information on the advantages of filing your tax return filed earlier take a look at this article.

What Account Ease Accounting Accountants can do to help can assist

We can assist you in completing your tax return earlier to help you understand what tax amount must be paid and when.

If you’re due an income tax refund It is logical to receive it as fast as you are able. We have worked with a lot of entrepreneurs and self-employed people and we are able to assist you too.

If you require help in your self-assessment issues contact us now on 0208 1334 4599 or contact us via our contact form online.

This article aims to provide information rather than advice and is based on the law and current practice. Taxpayers’ circumstances are different and if you believe that this article is helpful, it is essential to get in touch with us prior to taking action. If you choose to take or don’t decide to act as a result of reading this article prior to receiving our written approval we cannot accept liability in the event of any loss that you incur.


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