HMRC has replaced its default surcharge system with a points‑based penalty regime effective 1 January 2023. Late submissions accrue one penalty point each, with a £200 financial penalty triggered at filing‑frequency thresholds, while late payments incur percentage‑based penalties and interest at the Bank of England base rate plus 4%. Businesses must appeal within 30 days of a penalty notice and can reset points after a compliance period.
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The Independent · about 7 hours ago
The UK government will remove VAT from domestic electricity bills from 1 October 2026, cutting the rate from 5% to 0%. The change is expected to save households around £45 a year and will be funded by cancelling the Digital ID programme.
The Independent · about 9 hours ago
In the UK, the government announced an £850 million tax cut on energy bills, making electricity bills VAT free from 1 October 2026 in England, Scotland and Wales. Northern Ireland remains exempt because EU VAT rates apply under the Windsor Framework, preventing the cut from applying there.
BBC · about 14 hours ago
UK VAT will be cut from household electricity bills from 1 October, reducing the rate from 5% to zero and saving households about £45 a year. The cut is funded by savings from scrapping the digital ID programme and will apply to England, Scotland and Wales, with equivalent funding for Northern Ireland.
The Independent · about 14 hours ago
UK households will see 5% VAT removed from electricity bills from 1 October 2026, a move announced by Prime Minister Andy Burnham. The change is expected to save about £45 on a typical annual bill, though a projected 3.1% rise in the price cap may offset the benefit.
Yahoo News Canada · about 18 hours ago
The United Kingdom will see VAT on household electricity removed from 5% to 0% on 1 October, saving typical homes around £45 a year.
Law360 · about 18 hours ago
UK court rules that Staffing Co cannot recover input VAT because its director knew or should have known its supply chain was compromised by fraud. The decision underscores the importance of due diligence in supply chain management for VAT recovery.
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Key Takeaways
A financial penalty of £200 applies when a VAT‑registered business accumulates penalty points equal to its filing frequency threshold: 2 points for annual filers, 4 for quarterly, 5 for monthly.
For payments 31 days or more late, the first penalty is 3% of the VAT outstanding at day 15 plus an additional 3% of the amount still outstanding at day 30, followed by a daily rate of 10% per annum on the remaining balance.
Interest runs at the Bank of England base rate plus 4% on any unpaid VAT, and repayment interest at the base rate minus 1% (minimum 0.5%) on HMRC repayments.
Penalty points expire automatically 24 months after the return was due (or 25 months if the deadline was a month‑end) unless the business has reached the threshold and resets them.
A business has 30 days from the penalty notice to appeal, and must demonstrate a reasonable excuse such as serious illness, HMRC system failure, or mistaken belief that no return was due.
Primary source
Read the full article at VATITThis summary was published on VATfaqs.com on 20 June 2026. It relates to VAT developments in United Kingdom. The original source is VATIT.
