These Regulations, made by HM Treasury, appoint 1st April 2026 as the commencement date for specific penalty provisions within Schedules 24, 25, 26, and 27 of the Finance Act 2021 concerning income tax and capital gains tax.
The appointed day applies these penalties—covering failures to make returns, deliberate withholding of information, and failure to pay tax—specifically to 'digitally obligated persons' concerning tax matters related to the 2026-27 tax year and beyond, excluding trustees and partnerships.
Arguments For
Establishes a clear, mandatory implementation date (1st April 2026) for specific penalties related to digital tax obligations, ensuring certainty in the compliance regime.
Applies consequential penalty provisions from the Finance Act 2021 (Schedules 24, 25, 27, 26) specifically to 'digitally obligated persons' reporting for the 2026-27 tax year onwards, aligning the penalty framework with digital tax filing mandates.
Utilizes existing legislative powers (Finance Act 2021 sections 116-118) to schedule the commencement, demonstrating controlled, phased implementation of complex tax changes.
Arguments Against
The commencement date may impose unexpected or immediate compliance burdens on the definition of 'digitally obligated person' starting in the 2026-27 tax year, potentially requiring systems upgrades or process changes.
Delays the application of specific penalties for failures to file returns or pay tax for digitally obligated individuals until a scheduled date, potentially leaving a gap where existing, non-digital penalties might apply or where enforcement is less clear for these specific cases prior to this date.
Critics might note that this regulation exclusively targets 'digitally obligated persons,' suggesting a tiered penalty approach that might differentiate the seriousness of non-compliance based on digital status rather than the impact of the failure itself.
STATUTORY INSTRUMENTS
2026 No. 370 (C. 31)
INCOME TAX CAPITAL GAINS TAX
The Finance Act 2021 (Income Tax and Capital Gains Tax) (Penalties) (Appointed Day: Digitally Obligated Persons) Regulations 2026
Made - - - -
25th March 2026
This heading identifies the item as a Statutory Instrument from 2026, specifically number 370, and places it under the subject area of Income Tax and Capital Gains Tax.
It formally names the instrument as setting the appointed day for penalties introduced by the Finance Act 2021, applying specifically to persons required to comply digitally.
The Treasury make these Regulations in exercise of the powers conferred by sections 116(3) and (4), 117(2) and (3) and 118(2) and (3) of the Finance Act 2021( 1 ).
The Treasury created these rules by using specific statutory powers granted to them under sections 116, 117, and 118 of the Finance Act 2021.
These powers authorise the Treasury to set commencement dates for parts of that Act.
Citation
- These Regulations may be cited as the Finance Act 2021 (Income Tax and Capital Gains Tax) (Penalties) (Appointed Day: Digitally Obligated Persons) Regulations 2026.
This section specifies the official, short title by which the rules must be referenced—the Finance Act 2021 (Income Tax and Capital Gains Tax) (Penalties) (Appointed Day: Digitally Obligated Persons) Regulations 2026.
Interpretation
- In these Regulations, 'digitally obligated person' means a person who, in the tax year 2026-27( 2 ), is subject to a requirement to provide information under regulations made under paragraph 7 of Schedule A1 to the Taxes Management Act 1970( 3 )(periodic updates), other than a person to whom provision under paragraph 14(1A) or 15(3) of that Schedule applies (prior requirements to be treated as never having been imposed).
This regulation defines the key term 'digitally obligated person.' This refers to someone who, during the 2026-27 tax year, must report information based on rules made under Schedule A1 of the Taxes Management Act 1970 for periodic updates.
The definition excludes individuals for whom previous reporting mandates are legally disregarded.
Appointed Day
- -(1) 1st April 2026 is the day appointed for the coming into force of Schedules 24, 25 and 27 to the Finance Act 2021( 4 ) (penalties for failure to make returns or deliberately withholding
( 1 ) 2021 c. 26.
( 2 ) See sections 989 and 4(2) and (4) of the Income Tax Act 2007 (c. 3) for the meaning of the expressions 'tax year' and 'the tax year 2026-27' for the purposes of the Income Tax Acts, and section 288(1ZA) of the Taxation of Chargeable Gains Act 1992 (c. 12) for the meaning of those expressions for the purposes of enactments relating to capital gains tax.
( 3 ) 1970 c. 9. Schedule A1 was inserted by section 60(1) and (3) of the Finance (No. 2) Act 2017 (c. 32), and its provisions were amended by paragraph 7(2) of Schedule 6 to the Finance Act 2018 (c. 3), paragraphs 30 and 32 of Schedule 1 to the Finance Act 2022 (c. 3) and sections 256 to 258 of the Finance Act 2026 (c. 11).
( 4 ) Relevant amendments to Schedule 24 were made by sections 259 and 262 of the Finance Act 2026. Relevant amendments to Schedule 25 were made by section 259 of the Finance Act 2026.
information and consequential amendments), so far as not already in force, for the purposes of failures by digitally obligated persons in relation to returns( 5 )
which-
- (a) are required to be made in respect of persons other than trustees or partnerships in relation to the tax year 2026-27 or any subsequent tax year, and
- (b) fall within-
- (i) item 1 of the Table in paragraph 2 of Schedule 24, or
- (ii) item 1 of the Table in paragraph 1 of Schedule 25.
(2) 1st April 2026 is the day appointed for the coming into force of Schedules 26 and 27 to the Finance Act 2021( 6 ) (penalties for failure to pay tax and consequential amendments), so far as not already in force, for the purposes of failures by digitally obligated persons in relation to payments of the tax due on or before the specified date( 7 )
which-
- (a) are payable in respect of persons other than trustees or partnerships in relation to the tax year 2026-27 or any subsequent tax year, and
- (b) fall within the table relating to income tax or capital gains tax in paragraph 1 of Schedule 26.
25th March 2026
Taiwo Owatemi Christian Wakeford Two of the Lords Commissioners of His Majesty's Treasury
( 5 ) See paragraph 3(3) of Schedule 24 and paragraph 2(2) of Schedule 25 to the Finance Act 2021 for the meaning of 'return'.
( 6 ) Relevant amendments to Schedule 26 were made by section 335 of the Finance (No. 2) Act 2023 (c. 30), S.I. 2025/589 and sections 263 and 264 of the Finance Act 2026.
( 7 ) See paragraph 1 of Schedule 26 to the Finance Act 2021 for the meaning of 'tax due' and 'specified date'.
Regulation 3(1) establishes 1st April 2026 as the start date for penalties in Schedules 24, 25, and 27 of the Finance Act 2021.
These penalties relate to failing to file returns or deliberately withholding information.
This commencement applies only to digitally obligated persons filing for the 2026-27 tax year or later, provided the failure relates to specific return types (Item 1 tables in Schedule 24 or 25), and excludes returns for trustees or partnerships.
Regulation 3(2) similarly appoints 1st April 2026 as the start date for penalties in Schedules 26 and 27 related to failing to pay tax.
These apply to digitally obligated persons where tax was due on or before the specified date, concerning tax payable for individuals (not trustees or partnerships) in the 2026-27 tax year or later, as detailed in Schedule 26.
EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations provide that 1st April 2026 is the appointed day on which Schedules 24 to 27 come into force for income tax and capital gains tax for the purposes of failures by digitally obligated persons in relation to returns required to be made and tax payable by persons other than trustees or partnerships.
Schedules 24 to 27 to the Finance Act 2021 provide for penalties for failures to make returns, pay tax and for withholding information and make consequential amendments.
Regulation 2 defines digitally obligated persons by reference to regulations made under paragraph 7 of Schedule A1 to the Taxes Management Act 1970.
A Tax Information and Impact Note has not been prepared for this instrument as it gives effect to previously announced policy and it is appointed day regulations.
The Explanatory Note confirms that the purpose of the rules is to set 1st April 2026 as the appointed day for penalties in Schedules 24 to 27 of the 2021 Act.
These penalties target digitally obligated persons failing to submit required returns or pay tax, excluding trustees and partnerships.
It also notes that obligations are defined by reference to other tax legislation and that an impact assessment was waived because the instrument only enacts previously stated policy.
NOTE AS TO EARLIER COMMENCEMENT REGULATIONS
(This note is not part of the Regulations)
Schedules 24 to 27 to the Finance Act 2021 have been brought into force for certain purposes by commencement Regulations made before the date of these Regulations.
| Provision | Date of Commencement | S.I. No. | |----------------------------------------------------------------------------------------------------|------------------------|------------| | Schedules 24, 26 and 27 (for specified VAT purposes) | 1st January 2023 | 2022/1278 | | Schedules 24 to 27 (for specified Income Tax and Capital Gains Tax purposes) | 6th April 2024 | 2024/440 | | Schedule 26 (for the purpose of making regulations under paragraph 16(2) of that Schedule) | 12th November 2024 | 2024/1132> | | Schedule 26 (for the purpose of making regulations under paragraphs 11 and 22(4) of that Schedule) | 28th March 2025 | 2025/399 |
This note provides historical context, showing that previous commencement regulations already brought parts of Schedules 24 to 27 into effect for other specific purposes, such as VAT or earlier phases of Income Tax/Capital Gains Tax compliance (e.g., April 2024).
This new regulation focuses solely on activating the penalties for the specific group defined as 'digitally obligated persons' from April 2026.
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