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. 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. The government announced at Autumn Budget 2024 on 30 October 2024 that MTD for income tax will be extended to sole traders and landlords with income over £20,000 by the end of the Parliament, with the precise timing to be set out at a future fiscal event. Taxpayers that volunteer to join MTD for

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