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 (see Practice Note: VAT penalties). 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 (as announced at Spring Statement 2025) from 6 April 2028 for sole traders and landlords with qualifying income over £20,000 per year. This is subject to limited exceptions and deferrals. fTaxpayers 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

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