HMRC is introducing a new penalty regime for Self‑Assessment, due to take effect from 6 April 2027. The changes affect how penalties are charged for both late submission of tax returns and late payment of any tax due.
Although these reforms are intended to make the system fairer, they will also place greater emphasis on consistent compliance. Taxpayers who regularly miss filing or payment deadlines may find themselves exposed to higher penalties over time.
This article provides an overview of what is changing and what it means in practice.
Who will the new rules apply to?
From 6 April 2027, the new penalty regime will apply to all Self‑Assessment taxpayers. This includes individuals who are not yet required to comply with Making Tax Digital for Income Tax, as well as those who are already within MTD.
In other words, even if your Self‑Assessment obligations remain unchanged, the way HMRC charges penalties will not.
Late filing penalties: a move to a points‑based system
What happens under the current system?
At present, missing the Self‑Assessment filing deadline (31 January for online returns) results in an automatic £100 penalty, even if no tax is owed or the return is only one day late. Additional penalties then accrue the longer the delay continues.
What is changing from April 2027?
HMRC will abolish the automatic £100 late filing penalty and replace it with a points‑based penalty system.
Under the new framework:
- Each missed filing deadline results in one penalty point
- Penalties are only charged once a points threshold is reached, and the threshold depends on the filing frequency.
- Annual submissions require 2 points before triggering a penalty
- Quarterly submissions require 4 points before triggering a penalty
Once you reach the threshold:
- A fixed £200 penalty will be charged
- Each subsequent late return will trigger an additional £200 penalty
How do points expire?
- If you are below the penalty threshold, individual points will automatically expire after two years
- Once at the threshold, points remain in place until you:
- File on time, and
- Complete a set period of good compliance
This means occasional or isolated delays are less likely to result in penalties, but repeated lateness will quickly become costly.
Tougher Penalties for Late Payment of Tax
Alongside changes to late filing penalties, HMRC is also increasing penalties for late payment of income tax, effective from 1 April 2027.
These changes apply to:
- Traditional Self‑Assessment taxpayers
- Taxpayers within MTD for Income Tax
New late payment penalty structure
Under the new rules:
0–15 Days late
- No penalty
- This gives taxpayers a short grace period to settle liabilities
Days 16–30 late
- A penalty of 4% of the tax unpaid at the end of day 15
More than 30 days late
- A further 4% penalty on the tax unpaid at day 30
- Plus the first 4% penalty (making 8% in total)
- Daily penalties thereafter at a rate equivalent to 10% per annum, calculated from day 31 onwards until the tax is paid
Interest will also continue to accrue separately at HMRC’s prevailing interest rate.
For taxpayers with sizeable liabilities, particularly those with business, property or investment income, these penalties could escalate quickly if payment is significantly delayed.
What this means for taxpayers
Although the changes do not come into effect until 2027, they underline the importance of good compliance habits. In particular, taxpayers should ensure that:
- records are kept up to date throughout the year
- tax returns are submitted on time
- tax liabilities are planned for and paid promptly
Where there are cash‑flow difficulties or concerns about meeting a payment deadline, early action will be key. HMRC’s Time to Pay arrangements may be available in some cases, but these should be explored before penalties begin to accrue.
