Penalties for late payment and interest harmonisation

The changes now apply to VAT customers for accounting periods beginning on or after 1 January 2023.

For Income Tax Self-Assessment (ITSA) customers, the changes will apply as customers become mandated to Making Tax Digital (MTD). This means:

• for businesses, self-employed individuals and landlords with income over £50,000 per year from the tax year beginning 6 April 2026
• for businesses, self-employed individuals and landlords with income over £30,000 per year from the tax year beginning 6 April 2027

For all other ITSA customers outside the scope of MTD, the changes will apply after the introduction for MTD taxpayers.

Relevant information and guidance about the changes will be made available in a less technical form for taxpayers and those who represent them before their introduction.

For more information, read:

• the interest harmonisation and penalties for late payment and late submission tax information and impact note
• research on exploring communication needs of customers for the implementation of changes to late payment and late submission penalties