From April 2024, volunteers participating in the testing phase of Making Tax Digital for Income Tax, will be subject to the new penalty regime.

  • Finance Act 2024 granted HMRC the power to bring into force the New penalty regime for 'eligible volunteers'.
  • From April 2024, volunteers participating in testing Making Tax Digital (MTD) for Income Tax will be subject to the new Late filing and Late payment penalties, outlined in Finance Act 2021. 
  • These new penalty regimes use a point-based system for late submission and the late payment of tax liabilities.
  • The new penalty system is set to be introduced:
    • From April 2024, for volunteers participating in testing MTD for Income Tax.
    • From April 2026, for taxpayers with business or property income over £50,000 per year (who are required to submit digital quarterly updates through MTD for Income Tax).
    • From April 2027, for those with business or property income over £30,000.
  • There will be no late submission penalties for missing quarterly updates during the testing phase of MTD for Income Tax.
  • MTD testing volunteers must confirm their acceptance of the new penalty regime during registration.
    • Once a taxpayer has volunteered, they cannot opt out of the new system of penalties.
  • Existing volunteers will be contacted by HMRC via a letter, which will explain the acceptance process.
  • Authorised agents can agree to the new penalty regime on behalf of their clients.

Useful guides on this topic

Penalties: Late Filing MTD
A points-based late submission penalty regime is replacing existing late submission penalties for VAT and Income Tax Self Assessment (ITSA) under Making Tax Digital.

Penalties: Late Payment MTD
Penalties for late payment of tax under Making Tax Digital for VAT and Income Tax.

Penalties: Late Payment
What penalties are charged when tax is paid late? 

External link

HMRC: Penalties for Income Tax Self Assessment volunteers