How are self-assessment tax return penalties changing?

What are the current penalties for self-assessment tax returns? 

The current penalty regime for late filing of self-assessment tax returns is based on automatic time-based penalties. It starts with £100 for being one day late filing your return. For more details on the automatic fines which follow, see our piece here. 

There is a separate penalty regime for overdue payment of income tax. Interest is charged on income tax due from 1st February i.e. one day after the payment deadline. After 30 days, a 5% of tax owed penalty is added as well as interest continuing to accrue. For more details, see our Q&A here. 

Thirdly, penalties exist for incorrect tax returns and for failing to notify HMRC that you need to complete a tax return.  

What is the new self-assessment penalty regime? 

The new penalty regime for late filing will be based on accruing penalty points for certain actions, much like points on a driving licence for traffic infringements. Instead of automatic penalties, you will only receive a fine if you accrue a certain number of points. 

Missing the 31st January self-assessment filing deadline would mean you receive one point. After two points you will receive a £200 fine. This means you would only be fined for missing two annual submission deadlines (and not missing one deadline as you would currently) but the fine will be double the current initial automatic penalty of £100. 

The Government is also planning to change the penalty regimes for failure to notify and inaccuracy, following its Reform of behavioural penalties consultation in 2025. 

Why are the changes happening? 

The changes to the penalty regime are to bring the self-assessment penalties in line with the Making Tax Digital (MTD) for income tax penalty mechanisms which have already been announced.  

MTD for income tax begins on 6th April 2026 for the first taxpayers (self-employed business owners and landlords who had £50,000 and above qualifying income in 2024/25). It will have a points-based penalty regime covering the quarterly updates required under Making Tax Digital, as well as the end of year final declaration. 

No points will be applied for the first four quarterly updates - those for the first intake of taxpayers in the 2026/27 tax year - while the new system is established.  

When will the changes take place? 

The changes to the self-assessment penalty regime will begin on 6th April 2027. The points-based penalty regime will begin properly for Making Tax Digital for income tax on this date as well. 

How can TaxAssist Accountants help? 

If you are behind with your tax return filings, TaxAssist Accountants can help you get on top of your tax compliance and give you confidence you can make your filings on time in future. Call us on 0131 322 3988 for a free consultation, or use our contact form. 

Last updated: 29th January 2026