HMRC's New Penalty Points System Now Active for UK Taxpayers
HM Revenue and Customs has officially implemented its new penalty points system for certain UK households, marking a significant shift in how late tax submissions are handled. The rollout began in January under the current Labour Party government, with HMRC initially trialling the programme with 100 taxpayers as part of the broader Making Tax Digital initiative before expanding it to all self-assessment filers.
How the New System Works
Under the revised framework, individuals who miss self-assessment deadlines will no longer receive an automatic £100 fine. Instead, they will accumulate penalty points for each missed deadline. When a taxpayer reaches a specific threshold of points, they will then be required to pay a £200 financial penalty.
For annual filers: Missing two deadlines within a two-year period will trigger the £200 fine.
For quarterly filers: Missing four deadlines within the same two-year timeframe will result in the penalty.
A Fairer Approach to Tax Compliance
HMRC has described the new regime as "simpler and fairer than the previous system" in a previously published policy paper. The authority states that the approach 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 emphasised: "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."
Late Payment Charges Remain
It is important to note that taxpayers will still face separate costs for late payment of tax owed. The new late payment penalty structure consists of two distinct charges:
- The first charge becomes payable 30 days after the payment due date, calculated as a set percentage of the outstanding balance.
- A second charge accrues daily from day 31 onwards, based on the remaining sum outstanding.
Support and Communication
HMRC has stated it will work to minimise confusion and disruption through pre-implementation publicity campaigns and by providing clear information to those who need to sign up for the Making Tax Digital scheme. The authority aims to ensure taxpayers understand their obligations and can avoid penalties through timely compliance.
This change represents a fundamental restructuring of penalty enforcement, moving away from immediate financial penalties toward a points-based system that distinguishes between occasional lapses and persistent non-compliance.
