Penalties, interest and time limits

FORTHCOMING CHANGES relating to late payment and late submission penalties: As announced at Spring Budget 2021, Finance Act 2021 provides for substantial changes to the regimes for late payment and late submission penalties for VAT and income tax. For VAT, these changes (alongside changes aligning the late payment interest rules for VAT with those for income tax) take effect from 1 January 2023 for VAT. However, for those within income tax self-assessment, the changes are expected to come into effect as taxpayers become mandated to Making Tax Digital (MTD): from 6 April 2026 for those with business or property turnover of over £50,000 per year; from 6 April 2027 for those with business or property turnover of over £30,000 per year; and from a later date not yet specified for others within self-assessment. Taxpayers that volunteer to join MTD for income tax from 6 April 2024 are subject to this new penalty regime from that date. Penalties under this new late payment regime are intended to be broadly proportionate to the amount of tax owed and how late the payment is. For more details, see

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