MTD: late-payment penalties to be increased

The Finance Act 2021 (Amendment of Schedule 26 Penalty Figures) (Appointed Day: Regulation Making Power) Regulations SI 2025/399 enable changes to be made to the MTD penalties regime as announced by the Chancellor at Spring Statement 2025. The Regulations bring FA 2021 Sch 26 into force on 28 March 2025 but only for the purpose of making regulations under paras 11 and 22(4) of that Schedule (Sch 26 has been in force generally for VAT purposes since 1 January 2023).

Paragraph 11 is the key provision here paving the way for HMRC to change the percentage amounts for the MTD late-payment penalties. The UK Government announced at Spring Statement 2025 that these penalties would be increased from April 2025 onwards – not only for VAT but also for self-assessment taxpayers who have joined the MTD for ITSA trial (and for other ITSA groups from the...