Self assessment taxpayers due to join Making Tax Digital (MTD) for Income Tax
next April will not face penalties if late filing quarterly updates.
In the Autumn Budget 2025 documents, the government said it will not charge
penalty points if those joining MTD submit any of their compulsory quarterly
updates of income and expenses late during 2026/27.
This means that the first group of taxpayers earning non-PAYE income over £50,000
will not be liable for the new penalty regime under MTD until April 2027.
HMRC will apply the new penalty regime for late submission and late payment to
all income tax taxpayers from 6 April 2027.
The new system is based on a points-based sanctions regime and will penalise
those who persistently do not comply by missing filing and payment deadlines.
Under the new regime, when a taxpayer misses an annual submission deadline, they
will incur a penalty point. A taxpayer becomes liable to a fixed financial
penalty of £200 only after they have reached the points threshold of two for
late submission of their final declaration.
Sharron West, Technical officer at LITRG, said:
'We're pleased to see the government defer penalties for the first year of
Making Tax Digital.
'Making Tax Digital is the biggest change to the tax system since self
assessment and because of that, we expect that there will be some teething
problems when it goes live in April.
'This period of grace is especially good news for those who will be getting
used to the new system without the help of a tax adviser.'
Internet link: CIOT