The government are updating the penalties for used for VAT and Income Tax Self Assessment with the aim to make it fairer and more consistent.
The new system will be points based, with penalties issued when a threshold is reached. Late payments will be proportionate to the amount owed and also how late it is, encouraging prompt payment.
The new system has a phased implementation – VAT taxpayers have had the new system since 1st April 2022, with the Income Tax Self Assessment taxpayers with business or property income over £10,000 per year will have the updated charges from their accounting period starting beginning on or after 6th April 2023, with all other Income Tax Self Assessment taxpayers having the system from their accounting period starting on or after 6th April 2024.
