The penalties were buried in the small print published alongside the Spring Statement after Chancellor Rachel Reeves’ speech earlier today (26 March).
The new rates increase to 3% of the tax outstanding when tax is overdue by 15 days, 3% when tax is overdue by 30 days, and 10% per year when tax is overdue by 31 days or more.
Making Tax Digital will be expanded to sole traders and landlords with incomes of more than £20,000 from April 2028.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The UK Government is scouting for easy wins to fill its coffers more effectively and has set its sights on the self-employed who use the platform Making Tax Digital to file their returns. They’ll face higher fines from April if they don’t upload by the deadline.
“So, it’s an administrative burden [that] will really pay to be on top of. Starting early will mean there is less panic over paperwork. It’s always crucial to leave time to double check the returns, making sure you’ve completed every relevant section and inputted all the details. Set yourself plenty of reminders, and don’t forget to pay even once you’ve submitted all the data.”
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Charlotte Baroukh, chartered accountant and tax expert at Pie, said: “After over one million missed the tax return deadline in January, it’s no surprise that the Chancellor has announced an increase in the penalty fees for businesses and landlords submitting a tax return late. Although it’s likely that these new penalties will help incentivise some to not file late, many struggle to do their taxes on time due to finding it confusing, long-winded and complicated.
“With that, these latest figures are a harsh increase to the penalty – especially when businesses are struggling with ongoing economic challenges, such as the rise in National Insurance rates that are already causing many to close down. With this increase, it’s even more important that tax returns are filed as early and as accurately as possible – but in this time-scarce world, that’s not always as easy as it sounds.”
