Quick answer: There are no penalties for missing a quarterly update deadline in the 2026 to 2027 tax year. After that, each missed deadline earns one penalty point, and at four points you get a £200 penalty, then £200 for each further missed deadline. Paying late is a separate penalty, charged as a percentage of the tax you owe.
This guide follows HMRC’s own page, Penalties for Making Tax Digital for Income Tax on GOV.UK (last updated 30 March 2026). Rules can change, so check it before you rely on anything here.
Late updates: the points system
- You get one point for each missed quarterly update deadline (for tax years after 2026 to 2027) and for a missed tax return deadline. You can get at most one point per deadline, even if you have several businesses.
- The threshold is four points. Reaching it brings a £200 penalty, and another £200 for each further missed deadline while you stay at the threshold.
- MTD points are separate from VAT penalty points.
- 2026 to 2027 is a soft-landing year. There are no penalties for missing a quarterly update deadline in that whole tax year. You must still send the updates before your tax return.
When do points go away?
Points below the threshold expire automatically 24 months after the missed deadline. Once you are at the threshold, your points are removed only after 12 months of on-time updates and returns, and after you have sent anything still outstanding from the previous 24 months.
Late payment of tax
Late payment penalties are not points; they are a percentage of the tax you owe. They do not apply to payments on account.
| When you pay | What happens |
|---|---|
| First year of the new penalties | 30 days to pay or set up a payment plan with no penalty (once only; after that the grace period is 15 days). |
| 2026 to 2027, up to day 15 | No penalty. |
| 2026 to 2027, day 31 onwards | 3% of the tax owed at day 15, plus 3% of the tax owed at day 30, plus 10% a year charged daily from day 31 (for up to two years). |
| 2027 to 2028 | Same structure, but 4% instead of 3% (still 10% a year). |
Late payment interest is charged from day one, as it is now. If you agree a payment plan with HMRC, penalties pause from the date you contacted them.
Which penalties apply to you?
- The new penalties apply from the tax year you join MTD. Earlier years keep the old Self Assessment penalties: join on 6 April 2026 and the 2025 to 2026 return due on 31 January 2027 is still under the old rules.
- They do not apply to partnership, trust or estate returns, or non-resident company returns.
- If you become exempt during 2026 to 2027 you return to the old penalties. If you become exempt in 2027 to 2028 you stay on the new ones with a two-point threshold.
- From April 2027 the new penalties apply to everyone who files a personal Self Assessment return; points are scaled so that no one is closer to the threshold.
- Volunteers who join early have separate rules on GOV.UK.
Appeals
HMRC writes to you about each point and penalty, and the letter explains how to appeal.
Avoiding penalties
Keep your records up to date through the year, put the four deadlines (7 August, 7 November, 7 February, 7 May) in your calendar, and send each update through HMRC-recognised software. The MTD Spreadsheet Maker builds a digital record with quarterly totals, and bridging software sends them. Not sure whether you are in scope? Use the MTD checker. The next deadline is covered in the 7 November guide.
Frequently asked questions
Are there penalties for missing an MTD quarterly update in 2026 to 2027?
How many penalty points lead to a fine?
How long do MTD penalty points last?
Are late payment penalties the same as points?
Can I appeal an MTD penalty?
Want to stay on time?
Make an MTD-ready income and expense spreadsheet with quarterly totals. Nothing is uploaded.
Altto is not affiliated with HMRC. This is general information, not tax advice.