Making Tax Digital penalties: points, fines and late payment
Under Making Tax Digital (MTD) for Income Tax, each missed filing deadline earns a penalty point, and once you reach 4 points you pay a £200 penalty, plus another £200 for each further deadline you miss. For the 2026 to 2027 tax year HMRC will not give points for late quarterly updates, but a late tax return still earns a point, and late payment penalties and interest still apply.
When the new penalties start
The new rules replace the current late filing and late payment penalties on your personal tax return from the tax year you join MTD. Earlier years stay under the old rules.
Example: if you started MTD on 6 April 2026, your 2025 to 2026 return, due by 31 January 2027, still falls under the current Self Assessment penalties.
The new penalties do not apply to returns for trusts or estates, non-resident companies or partnerships. Those keep the current penalties.
The first year: no points for late quarterly updates
For 2026 to 2027, GOV.UK says there are no penalties for missing a quarterly update deadline. This is the easement for the first year.
It is not a holiday from the updates themselves. You still need to keep digital records and send every quarterly update before you can file your tax return. Penalty points still apply if your 2026 to 2027 return is late.
The quarterly deadlines are 7 August, 7 November, 7 February and 7 May. Our guide to quarterly update deadlines has the full calendar.
How penalty points work
From 2027 to 2028 onwards, you get a point for each missed quarterly update deadline. You also get a point each time you miss the tax return deadline, which is 31 January after the tax year ends.
- You get only one point per deadline, even if you have several businesses and send more than one update late
- The threshold is 4 points. Reaching it triggers a £200 penalty
- Every further missed deadline after that brings another £200 penalty
- MTD points are kept separately from any VAT penalty points
Example: in 2027 to 2028 you miss all four quarterly deadlines. The fourth missed deadline, 7 May 2028, takes you to 4 points and a £200 penalty. If you then miss the 31 January 2029 return deadline, that is another £200.
How penalty points expire
While you are below 4 points, each point drops off automatically 24 months after the deadline you missed.
Once you reach 4 points, points stop dropping off one by one. To clear them all you must meet two conditions:
- Send your quarterly updates and tax return on time for 12 months
- Send any outstanding updates and returns due in the previous 24 months
You can see when your points will be removed in your HMRC online services account. In exceptional cases, such as insolvency, HMRC may cancel penalties or points.
Late payment penalties
Late payment penalties apply to balancing payments and to tax due after an amendment or assessment. They do not apply to payments on account. They are not points based: each late payment can be penalised.
For tax owed for 2026 to 2027:
- Paid up to 15 days late: no penalty
- Paid 16 to 30 days late: 3% of the tax owed at day 15, or nothing if it is your first year
- Paid 31 or more days late: 3% of the tax owed at day 15, plus 3% of the tax owed at day 30, plus a 10% yearly rate charged daily from day 31 until you pay, for up to 2 years
For 2027 to 2028, the two percentages rise to 4%. The 10% daily-charged rate stays the same.
In your first year of the new penalties, you have 30 days from the due date to pay in full or contact HMRC to set up a payment plan. After that it drops to 15 days. You only get the 30 days once, so if you volunteered first, you keep the 15-day period when you become required to use MTD.
Example: it is not your first year, and you owe £4,000 for 2027 to 2028, due on 31 January 2029. If you pay 25 days late, the penalty is 4% of £4,000, which is £160, plus interest.
Late payment interest
Interest is separate from penalties and is charged from the first day a payment is late until it is paid in full. MTD does not change how it works.
HMRC sets the rate at the Bank of England base rate plus 4%. Check the current figure on GOV.UK.
If you cannot pay on time
Contact HMRC as early as you can. If you agree a payment plan and keep to it, penalties are paused from the date you got in touch.
You can still be penalised if a plan cannot be agreed or you do not stick to it. See GOV.UK for the options.
Volunteers and people who become exempt
If you volunteer before you are required to, you get no penalties for late quarterly updates. Late returns earn points, and the threshold is 2 points. You have to accept the new penalties when you sign up and cannot go back to the old ones.
If a volunteer becomes required to use MTD from 2027 to 2028, the threshold rises to 4 and late quarterly updates start to earn points. Any existing point goes up by 2, so you stay the same distance from the threshold.
If you become exempt during 2026 to 2027, you go back to the current Self Assessment penalties. If you become exempt in 2027 to 2028, you stay on the new penalties, because HMRC says they apply to everyone who sends a personal Self Assessment return from April 2027. Your threshold drops to 2, and your points are cut so you are no closer to it: 3 points would become 1. Our guide to MTD exemptions explains who qualifies.
What if you have not signed up yet?
If you needed MTD from April 2026 and have not signed up, HMRC started signing people up in stages from September 2026, using the information it already holds.
Whether HMRC signed you up or you sign up late yourself, you need to create digital records from the start of the tax year and send any overdue quarterly update as soon as possible. For 2026 to 2027, a late quarterly update will not earn a point. Our guide on how to sign up for MTD covers the steps.
Appealing a penalty
HMRC will write to you for each late payment penalty, late submission point or £200 penalty. If you disagree, the letter explains how to appeal.
Keeping on top of deadlines with Snapfile
Snapfile records receipts and invoices you send on WhatsApp, assigns HMRC expense categories, tracks the tax year and quarter, and sends deadline reminders. It does not submit to HMRC, so you will still need software that can send your updates. It is free during early access, with a Pro plan planned at £9.99 a month.
Common questions
What happens if I miss an MTD quarterly update deadline?
For 2026 to 2027 there is no penalty, but you still have to send the update before you can file your tax return. From 2027 to 2028, each missed deadline earns a penalty point.
How many penalty points before a fine under MTD?
4 points if you are required to use MTD. Reaching 4 points triggers a £200 penalty, and each further missed deadline adds another £200. Volunteers have a 2-point threshold for late returns.
How long do MTD penalty points last?
Below the threshold, each point is removed 24 months after the missed deadline. At the threshold, you clear all points by filing everything on time for 12 months and catching up anything outstanding from the previous 24 months.
Is there a penalty for late MTD quarterly updates in the first year?
No. GOV.UK says there are no penalties for missing quarterly update deadlines in 2026 to 2027. Late tax returns and late payments can still be penalised.
Are MTD penalty points the same as VAT penalty points?
No. If you are also registered for VAT, your MTD for Income Tax points are counted separately from your VAT points.
Sources: GOV.UK: Penalties for Making Tax Digital for Income Tax; GOV.UK: Penalties for Making Tax Digital for Income Tax volunteers; GOV.UK: Use Making Tax Digital for Income Tax: Send quarterly updates; GOV.UK: Sign up for Making Tax Digital for Income Tax; GOV.UK: Check what to do if HMRC has signed you up for Making Tax Digital for Income Tax; GOV.UK: HMRC interest rates for late and early payments; GOV.UK: Apply for an exemption from Making Tax Digital for Income Tax. This is general information, not tax advice; check GOV.UK or an accountant for your situation.
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