HMRC: new penalty points system replaces £100 UK self assessment fines - what it means for your tax return
HMRC’s new system is designed to reward learning the ropes, not punishing slip-ups 📊
- HMRC is replacing automatic £100 fines for late self assessment with a penalty points system
- The new system is being trialled with 100 Making Tax Digital users before a wider rollout
- Occasional missed deadlines won’t trigger immediate charges; points accumulate toward a £200 penalty
- First-year grace period allows late submissions without financial penalty for MTD users
- The change aims to penalise persistent offenders rather than honest mistakes
If you’ve ever groaned at the thought of a £100 fine for missing a self assessment tax deadline, relief may be on the way.
HMRC is swapping its traditional fines for a penalty points system, a change set to affect millions of UK taxpayers just as the self assessment deadline looms.
The new system is being trialled this month with 100 taxpayers participating in HMRC’s Making Tax Digital (MTD) scheme.
Under the changes, missing a deadline won’t trigger an automatic fine, and instead, a penalty point will be applied to your account.
Accumulating points could eventually result in a £200 charge, but occasional slip-ups won’t hit your wallet immediately.
Why the change could be fairer
Liam Coulter, tax director at Wilson Nesbitt, called the points system “a fairer alternative” to the automatic fines of the past.
He said: "HMRC's change to a points-based system appears to be a fairer alternative to the automatic fines administered previously, with the new system designed to penalise persistent offenders rather than those who have made honest mistakes."
What to be aware of
For those navigating Making Tax Digital, the timing may feel tricky. MTD for Income Tax will become mandatory for many self-employed people and landlords from April 6, 2026, with a phased rollout based on income:
- Income above £50,000 in 2024–25: start MTD on April 6, 2026
- Income above £30,000 in 2025–26: start MTD on April 6, 2027
- Income above £20,000 in 2026–27: legislation is planned to lower the threshold
Coulter says that MTD brings more administrative responsibility, including quarterly reporting and learning new digital tools, which can add stress for taxpayers.
But HMRC is offering a grace period in the first year, allowing late submissions without financial penalty, a welcome buffer for those still adjusting to the system.
Should you be worried?
An HMRC spokesperson said: "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. We're committed to helping customers get their tax right to avoid fines altogether.”
For most taxpayers, especially those who file on time, the switch to penalty points is unlikely to cause panic, as it’s aimed at habitual late filers, not the occasional slip-up.
But with MTD coming into force in just a few months, it’s a good idea to familiarise yourself with the new system and plan ahead.