HMRC is bringing in a new “points mean penalties” system for late tax returns – and it’s about to change how self‑assessment fines work for millions of taxpayers.
What’s changing with HMRC fines?
HMRC is starting to roll out a new penalty points regime this month as part of its wider Making Tax Digital overhaul. Instead of hitting people with an automatic £100 fine the moment they miss the self‑assessment deadline, late filers will now rack up penalty points first.
The system is being trialled initially with 100 taxpayers before being extended to everyone who files a tax return. HMRC says the goal is to make the regime “simpler and fairer” by targeting persistent offenders rather than those who slip up once in a while.
How the new HMRC points system works
Under the new rules, every missed filing deadline earns you one penalty point. Those points accumulate over time, and once you hit a set threshold, they trigger a financial penalty.
Instead of a £100 fine appearing after a single late return, the new cash penalty will be £200 but only once you’ve reached your points limit. Crucially, that limit depends on how often you are supposed to file:
- Annual filers: Two missed deadlines within two years will lead to a £200 fine.
- Quarterly filers: Four missed deadlines within two years will result in a £200 fine.
In other words, one-off lateness won’t instantly cost you money, but repeated delays will be punished more heavily once you cross the line.
Who will be affected by this new HMRC points system?
The changes are being introduced under the Making Tax Digital programme, which is gradually moving more taxpayers onto digital record‑keeping and more frequent reporting. The pilot with 100 taxpayers is a testing ground before the regime becomes the norm for everyone who has to submit self‑assessment returns.
People who only file once a year such as many sole traders, landlords and those with untaxed income will fall under the “annual” threshold. Those brought into more regular digital reporting, such as some businesses and landlords filing quarterly updates, will be judged against the higher quarterly threshold.
Why HMRC says it’s ‘fairer’
Under the old system, you could be just a day late and still be slapped with a flat £100 fine, even if your record was spotless. HMRC argues that the points‑based regime is more proportionate because it distinguishes between occasional human error and repeated non‑compliance.
In a previously published policy paper, HMRC said the new penalty regime is intended to be “simpler and fairer than the previous system”. It is explicitly designed to penalise those who “persistently do not comply” with filing and payment deadlines, while being more lenient on people who only occasionally miss their obligations.
What taxpayers should do now
For most people, the basic advice remains the same: file on time, every time, and you will never see a penalty point. But the new system does offer a little more breathing space for those who genuinely slip up once, especially as HMRC beds in its Making Tax Digital reforms.
If you are moving onto quarterly reporting, it will be more important than ever to keep track of your deadlines so you do not quietly accumulate points in the background. While the £200 fine only lands after several missed deadlines, letting things slide could quickly prove more expensive than the old £100 one‑off hit.