Quick Answer: From 6 April 2026, HMRC’s hmrc penalty points 2026 system replaces the old automatic £100 fine for late tax returns. Instead, you build up points for each missed deadline, and only get a £200 fine once you hit the threshold.
Short Summary: The old rule was blunt. Miss the 31 January deadline once, even after twenty years of filing on time, and you got hit with the same £100 fine as someone who never files anything properly. That’s changed. The new HMRC penalty points 2026 system works more like a driving licence: points build up for each late submission, and the fine only lands once you cross a threshold. It started with VAT back in January 2023 and is now rolling out to Income Tax Self Assessment through Making Tax Digital. If you’re a sole trader or landlord earning over £50,000, this affects you from this April.
- Rolls out from 6 April 2026 for sole traders and landlords with income over £50,000 who must join Making Tax Digital (MTD) for Income Tax
- Extends to those earning over £30,000 from 6 April 2027, then to all self-assessment taxpayers
- A £200 penalty applies once you hit the points threshold, not after a single late filing
- Thresholds differ by filing frequency: 2 points for annual filers, 4 for quarterly filers, 5 for monthly filers
- Points expire automatically after a period of consistent on-time filing
- HMRC is giving a soft landing: no points for the first four quarterly updates after joining MTD in April 2026
- Taxpayers outside MTD still fall under the old £100 fine system for now, so two regimes run side by side
What Is the HMRC Points-Based Penalty System?
Instead of an instant fine for missing a deadline, you get a point. A points-based late filing penalty regime was introduced by the Finance Act 2021, replacing the previous late filing penalties, and it first applied to VAT from January 2023. Individuals brought into MTD for Income Tax are now subject to the same rules.
Nobody gets fined for one slip. The system exists to catch repeat offenders, not people who miss a deadline once because life got in the way.
Also read: Universal Credit Migration Reaches Final Stage After Major DWP Update
When Do HMRC Penalty Points 2026 Rules Actually Start?
The changes apply to businesses, self-employed individuals and landlords with income over £50,000 a year from the tax year beginning 6 April 2026, and to those earning over £30,000 a year from 6 April 2027. Everyone else on Self Assessment stays under the current system until MTD reaches them too.
If you’re not yet mandated into MTD, this won’t touch you just yet. But it’s coming, so it’s worth understanding now rather than scrambling later.
Also read: The Link Between ADHD and Those Impulse Purchases You Regret
How Many Points Before You Get Fined?
This depends on how often you’re required to file. Annual filers need fewer strikes before a penalty hits; monthly filers get more room because they’re filing more often.
| Filing Frequency | Points Threshold | Fine Once Reached |
|---|---|---|
| Annual | 2 points | £200 |
| Quarterly | 4 points | £200 |
| Monthly | 5 points | £200 |
Once you’re at the threshold, every further late submission triggers another £200 charge until you get back on track.
Do Points Ever Expire?
Yes. Points are removed automatically after 24 months if the penalty threshold has not been exceeded. If you’ve already gone over the threshold, clearing your points takes longer and depends on keeping every submission on time for a set run of future periods.
Good behaviour resets the clock. That’s the whole point of the system.
Also read: What The Rachel Reeves Cash ISA Changes Mean For UK Savers
Does This Affect VAT Too?
Yes, and it already has for a while. This measure introduced a new points-based penalty regime for regular tax return submission obligations, replacing existing penalties for VAT and Income Tax Self Assessment. VAT-registered businesses have been living with this system since January 2023. Income Tax filers are the ones catching up now.
Also read: Latest Updates In DWP Benefits And What They Mean For You In 2026
Latest 2026 Updates
HMRC isn’t dropping people into the new rules cold. At Budget 2025, it was announced that no penalty points will apply to the first four quarterly updates for individuals joining MTD in April 2026, though those updates still need submitting before the year-end tax return can go in. That grace period doesn’t stretch to the annual return itself.
There’s also flexibility built in for people going through hard times. Where a taxpayer is going through an insolvency process, HMRC may not charge a late submission penalty for that period, and any points already awarded can be cancelled.
Worth remembering: this isn’t the same as late payment penalties, which run on a completely separate percentage-based system with interest charged from day one. Points relate purely to filing on time, not paying on time.
FAQ
Will I get fined the first time I file late under the new system?
You’ll get a point, not a fine. The £200 penalty only kicks in once you reach your threshold.
How many points can I get before HMRC fines me?
It depends on your filing frequency: 2 points if you file annually, 4 if quarterly, 5 if monthly.
Do HMRC penalty points 2026 rules apply to everyone from April?
No. Only sole traders and landlords with income over £50,000 who are mandated into MTD for Income Tax. Others follow in 2027 or later.
Can penalty points be removed?
Yes, points clear automatically after a period of on-time filing, usually 24 months if you haven’t crossed the threshold.
Is this the same as a late payment penalty?
No. Late submission points are separate from late payment penalties, which are charged as a percentage of unpaid tax plus interest.
Sources & References
- Interest harmonisation and penalties for late payment and late submission, GOV.UK
- Penalties for late submission, GOV.UK
- CH192420 Penalty reform: insolvency, GOV.UK
- MTD for income tax penalties, ICAEW
- Penalties: Making Tax Digital, Ross Martin
Note: This article is for general informational purposes only and is based on HMRC guidance and government announcements available at the time of writing. Tax rules and Making Tax Digital requirements may change. Always refer to the latest HMRC guidance or consult a qualified tax adviser if you need advice about your individual circumstances.
